Standard history of Pittsburg, Pennsylvania, Part 35

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 35

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In March, 1834, Mr. Webster introduced a bill in the United States Senate to extend the charter of the bank for six years, or until March, 1840. This bill was voted down by the supporters of President Jackson. It then became evident to the bank officials that they could look for no hope nor relief from that quarter, whereupon they applied to the State of Pennsylvania for a charter as a State institution. The General Assembly, in 1836, rechartered "the present stockhold- ers of the Bank of the United States (excepting the United States and the Treas- urer of the United States), and such other persons as may become stockholders," with a capital of any amount not exceeding $35,000,000, the charter to continue alive and in operation until March 3, 1866, and the institution was granted general banking privileges. It was permitted to establish two branches of dis- count and deposit within the State-one at Pittsburg.

(a) Gazette, February 14, 1834. (b) Laws of Pennsylvania, April 2, 1831.

(d) Of the Bank of the United States. (c) Laws of Pennsylvania, February 10, 1832.

(e) Report of Committee on Finance, February, 1834.

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"The United States Bank is now an institution changed in its very essence, as much as it well can be unless it should cease to be a bank. It was a national institution quartered upon us, which was a thing obnoxious to many people of this State; it is now an institution of our own, as entirely as the Bank of Penn- sylvania or the Bank of Pittsburg. The name is retained on account of the bank- note plates on hand, the impressions of which are familiar to business men and better than new; but what is of still more account, its wise management has given its name a commercial value. All those who are opposed to a National bank and who prefer the State banks .should join in support of this, as its exist- ence will be the most effectuai preventive of a National bank. It has ceased to hold a semi-alien character and is now the child of Pennsylvania. It is all our own, and while our neighboring states evince a disposition to aim a blow at our fast rising prosperity by striking at the bank, it will cling to the bosom of its inother for protection. A proposition has been made in the Ohio Legislature to prohibit the currency (circulation) of the bills of this bank in that State. Such an outrage upon the institutions of any State has never been attempted before, and, if carried into effect, will arouse every Pennsylvanian in defense of our State rights-not a claim of right to nullify United States laws, but a claim to defend our own institutions and interests" (f).

Congress enacted that within three months therefrom the Bank of the United States and its several branches should pay into the National Treasury "all the money in their possession for the redemption of the public debt of the United States," etc. (g).

The Secretary of the Treasury was required (h) to assume and exercise the agency of, and the direction in behalf of, the Government over its property in the Bank of the United States, and was invested with authority to act as such agent of the Government, and was clothed with other power looking to the ter- mination of the business career of the bank so far as the Government interests were concerned. On April 20, 1836, the right or power of the United States Bank to pay pensions was repealed and taken away by Congress. From March 3, 1834, to April 19, 1834, the Branch here, as agent of the Government, had paid out to about 900 pensioners nearly $40,000.

The Kittanning Gazette of July, 1836, said that the Pennsylvania Bank of the United States was reported to be doing more business than ever it did under the old charter. The National Gazette at this time said that the national finances were fairly set on a prosperous footing. On July 25, 1836, Michael Allen, Jacob Forsyth, William W. Irwin, Jesse Lippincott, William Bell, Patrick Mulvany, William Wade, Charles Avery, John M. Snowden, Abishai Way, Thomas Bake- well and Moses Atwood were elected directors of the Pittsburg Branch of the United States Bank. Michael Allen was chosen president. On July 6, 1836, it was announced that the bank was now open for business under the charter granted by this State.

In the fall of 1836 the Bank of the United States offered the Government for each share it held in that institution the sum of $111.47 (i). At this time, so severe was the attack on this institution, owing doubtless to the partisan rancor engendered by the Jacksonians against the very name of the bank, as well as against its officers, there was strong talk throughout Pennsylvania that the institution, though chartered by the State, should surrender that instrument and demand back the large bonuses (j) for various public improvements it had given as a condition for its charter (k).

(f) Pittsburg Times, March 9, 1836. About six months later the Times was as bitter in its denunciation of the bank as it had formerly been warm in its praise (g) April 11, 1836. (h) Act of June 23, 1836. (i) National Gazette.

(j) These bonuses amounted to $6,000,000.

(k) Pittsburg Gazette, September, 1836.

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When the Merchants' and Manufacturers' Bank went into operation in 1833, James Correy, cashier of the Branch, seeing that the parent bank would not be rechartered, accepted the position of cashier in the new bank, leaving John Thaw, formerly bookkeeper of the Branch, to wind up the affairs of the latter. In fact, July 5, 1833, he succeeded Mr. Correy as cashier of the Branch. On June 25, 1836, the branch having been chartered by the State, Mr. Correy was recalled and reinstated as its cashier (1).

"Resolved, That the chartering of the Bank of the United States as a State bank was an act of the greatest expediency and the soundest wisdom, and has placed Pennsylvania on a footing of prosperity which cannot be shaken.

"Resolved, That the veto messages of Governor Ritner meet our entire appro- bation and that if the doctrines relative to banking and currency expressed be carried into practice, Pennsylvania will be safe from a recurrence of the distress which followed the litter of small banks of 1814" (m).

On the Ioth of May, 1837, the Bank of the United States gave to the Gov- ernment, to settle its claim, four bonds for $1,986,589.04 each, dated March 3, 1836, and falling due September, 1837, 1838, 1839 and 1840, drawing six per cent. interest per annum. The conclusion to accept this proposition from the bank was arrived at in Congress on May 31, 1837, each share to be estimated at $115.58. On July 7, 1838, Congress authorized the Secretary of the Treasury to sell upon the best possible terms two of the above-named bonds, falling due, respectively, September, 1839, and September, 1840. The one falling due Sep- tember, 1837, had been paid before it was due.

By its charter, the Pennsylvania Bank of the United States was required to lend to the State, whenever required, after due notice, the sum of $6,000,000 at six per cent. interest. On the 15th of January, 1841, the State banks, in con- formity to law, resumed the payment of their notes in specie, and continued to do so until the 4th of February, 1841, when they were again compelled to suspend. This was precipitated by the action of the Bank of the United States, which, on that date, closed its doors. The Bank of the United States, having paid out within twenty days, pursuant to its notice to the public, upward of $6,000,000 in specie and specie funds, was forced to suspend. A dreadful run had been made upon it. When the Pennsylvania Bank of the United States suspended the Branch at Pittsburg did likewise. Its notes were soon at eight to twelve per cent. discount and its stock from $38 to $48 per share. Soon the notes were fifteen per cent. discount and the stock $23 per share. In May, 1841, the notes fell to twenty per cent. discount; by January, 1842, to twenty-five per cent. discount; by December, 1844, to thirty per cent. discount, and in some places were quoted as low as fifty and sixty per cent. discount. In June, 1841, W. H. Denny was appointed agent of the trustees of the Pennsylvania Bank of the United States to collect the debts due the Branch at Pittsburg (n).

On the 4th of September, 1841, the Pennsylvania Bank of the United States assigned, whereupon its stock fell to any price brokers were willing to give. The Branch at Pittsburg shared the fate of the mother bank. Its notes fell to . from forty to seventy per cent. discount. Slowly its affairs were wound up- debts paid and dues collected. It took many years to close the account between the State and this bank. By act of February 26, 1853, the State Treasurer was authorized to receive from the Pennsylvania Bank of the United States $150,000, "in full satisfaction of all claims."

(1) Gazette, September 8, 1836.

(m) Action of Anti-Masonic County Convention, September 6. 1836.

(n) Mercury and Democrat, June 30, 184I.

Yours. Inily John S. Ferguson

CHAPTER XIV.

PRIVATE AND STATE BANKING OPERATIONS-THE ACT OF MARCH, 1808-ITS REPEAL IN MARCH, 1810-BANK OF PITTSBURG ESTABLISHED IN 1810 FORCED TO CLOSE-ORGAN- IZATION OF THE PITTSBURG MANUFACTURING COMPANY-ITS USEFULNESS DURING THE WAR OF 1812-THE "MAMMOTH BILL" OF 1813-14-BANK OF PITTSBURG-ITS OFFICERS AND MANAGEMENT-VIEWS OF THE TIME ON BANKING-SUSPENSION OF SPECIE PAYMENTS-PUBLIC EFFORTS TO SECURE SMALL CHANGE-INTENSE FINANCIAL DISTRESS-BEAVER BRANCH OF THE BANK OF PITTSBURG-FARMERS' AND MECHANICS' BANK-ITS ROBBERY BY PLUYMART AND EMMONS-RUIN AND CLOSING OF THE BANK-CITY BANK OF PITTSBURG-MERCHANTS' AND MAN- UFACTURERS' BANK-PITTSBURG SAVINGS INSTITUTION-THE EXCHANGE BANK-ISSUE OF CITY BILLS-REMOVAL OF THE GOVERNMENT DEPOSITS BY PRESIDENT JACKSON - GREAT EXCITEMENT - PUBLIC PROCEEDINGS- DELEGATION SENT TO WASHINGTON-THEIR INTERVIEW WITH PRESI- DENT JACKSON - COUNTER-MEMORIAL - GREATER BANKING CAPITAL DEMANDED-THE SUSPENSION OF 1837-THE HARD TIMES REVIEWED -ANTI-BANK MOVEMENTS -- SHINPLASTERS-RESUMPTION AND SEC- OND SUSPENSION-RELIEF LAWS-STATISTICS-PRIVATE BANKERS.

The act of March 28, 1808, relating to the association of individuals for the purposes of banking provided: "That if any association of citizens or others shall hereafter be formed within this Commonwealth for the purposes of banking or of borrowing or loaning money, in any manner or upon any terms whatever, each and every person becoming a member of such association or interested therein by subscription, contribution, stock or agreement, to participate in, profit or otherwise, and his assigns, shall be individually and personally liable for the debts and engagements of such association in like manner and to the same extent as if he, she or they, had personally contracted such debt or made such agreement, any agreement of such association with their creditors or others, or any declaration by them in any manner made, to the contrary 110t- withstanding."

The act further provided that no person should be answerable for the debts of such association contracted after his connection with the same had been sev- ered, and that no company incorporated by the laws of any other of the United States should be permitted to establish within Pennsylvania any banking-house or office of discount and deposit.

The act of March 19, 1810, provided that after May 1, 1810, "It shall be unlawful for any association of persons who now are, or hereafter may be, con- nected for the purposes of banking, and who are not incorporated by law, to make, utter, or issue any bills or notes in the nature of banknotes payable to bearer, or order, or otherwise; to loan any sum or sums of money upon any actual or accommodation note or notes; to receive any sum or sums in the nature of deposits; or to do or perform any other act which an incorporated banking company may lawfully do." It was also declared unlawful for any person or persons whatever to make any deposits in such banks, or to offer at such banks any note for discount, or to take or transfer any stock of such association for the purpose of banking and a penalty of $100 for every such offense was attached to

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the enactment. It was likewise made unlawful, after May 1, 1810, for any person to offer or accept in payment the notes issued by an unincorporated bank know- ing them to be such; and any payment so made with such notes was declared null and void. But it was provided that nothing in this act should be so con- strued as to release any person from a debt contracted before its passage; nor that the act should be "applied to any partnership in trade or business in such manner and for such purpose as hath been hitherto usual and may be legally clone."

The act of 1810 did not prevent private bankers from continuing their operations, nor prevent them from issuing paper money; but such continuance and such issues were unlawful, though in almost every instance they received the approval of the local communities, owing to the extreme scarcity of small currency. In fact, notwithstanding this prohibitory law, individuals of Pitts- burg, and the city itself, issued small denominations of paper money at a later date. The Bank of Pittsburg, which had begun operations a few months before the passage of this law and had emitted a small quantity of its notes, was thus forced to discontinue, though it reorganized later and continued a partial bank- ing business as the Pittsburg Manufacturing Company. This act of March 19, 1810, was not repealed until April 3, 1841.

Early in the month of February, 1810, an association of individuals of Pitts- burg, sanctioned by the restrictive act of March 28, 1808, commenced a bank- ing business under the name of the "Bank of Pittsburg." By the act of March 19, 1810, the law of 1808 was made prohibitory and obliged the Bank of Pitts- burg to suspend its operations "under heavy losses and great disappointments." They, therefore, in 1810, memorialized the Legislature to grant them a charter to conduct banking operations and offered in consideration thereof to transfer to the State $40,000 of the capital stock of the bank, or conditionally $45,000 to $60,000 to certain public improvements in the Western country. In behalf of the company this memorial was signed by William Wilkins (its president), Abraham Kirkpatrick, William McCandless, John Darragh, James Martin, Thomas Cromwell, Henry Fulton, Joseph McClurg, Robert Spencer, Francis B. Holmes, John Scull (owner and editor of the Gazette), William Woods, Nicholas Cunningham, Ephraim Pentland, Robert Simpson, George Sutton, Thomas Bracken, William Hayes, James Morrison, James Riddle and Jeremiah Barker, directors. The memorialists failed to receive their expected charter in the time desired and accordingly continued their operations of banking and insurance under the name of the "Pittsburg Manufacturing Company." From the start the institution issued its own notes, based upon the reputation and wealth of its stockholders, and from the start had the unlimited confidence of the community. Some of the notes issued by the Pittsburg Manufacturing Company were in circulation, though uncurrent, as late as June 25, 1819 (a).

"A meeting of the stockholders of the Pittsburg Manufacturing Company will be held in their office on the first Monday of July next for the purpose of electing fifteen managers for the ensuing year.

ALEX. JOHNSTON, Chief Clerk."

"Pittsburg, June 9, 1812.

"The office of the Pittsburg Manufacturing Company will be opened on Tuesday the 16th inst. for the transaction of business (b). Independent of afford- ing facilities to the manufacturing interest, insurances will be effected on houses, stores and other buildings, with the furniture, goods, utensils of trade and materials for manufacture therein contained, against loss or damage by fire;

(a) American State Papers, Vol. III, page 818.

(b) Commonwealth of June, 1812.

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and on vessels descending or boats ascending or descending the rivers, together with their cargoes against loss or damage by the perils of navigation. Hours of business from 9 o'clock a. m. until 3 o'clock p. m.

"Pittsburg, June 16, 1812. ALEXANDER JOHNSTON, Chief Clerk."

On October 13, 1812, the Pittsburg Manufacturing Company ordered that a further installment of five per cent., equal to $2.50 on each share of the capital stock of the said company, should be paid by the stockholders on or before January 1, 1813. In January, 1813, the company again applied to the Legis- lature for a bank charter. In a long editorial in the Mercury advocating the granting of the charter the editor says (c):

"The borough of Pittsburg alone, without referring to other examples, is a striking evidence of the truth that banking companies when conducted with becoming liberality give a spring to the exertions of the industrious farmer, mechanic, manufacturer and merchant. For, since the establishment of this insti- tution among us, our manufactures and commerce have increased beyond all calculation, and consequently it has greatly promoted the prosperity of the farmer and mechanic." "During the late pressure of the agents of the United States Government for money to pay the troops, etc., destined for the north and northern frontiers, this unincorporated institution, whose political influence has unfortunately excited the mistaken apprehensions of some worthy men, granted extensive accommodations at their own inconvenience to the agents of the Government -- accommodations without which our military operations would have been essentially retarded."

"Whereas, The 'Pittsburg Manufacturing Company' is composed of the same people, was grafted on and grew out of the former association, called the 'Bank of Pittsburg,' it is thought but fair and reasonable that the present com- pany discharge the remaining debts of the former, and refund the money advanced by individuals to defray expenses" (d).

On January 14, 1813, the company declared a dividend of three per cent. for six months on all stock actually paid in; and on July 1, 1813, declared another dividend of four and one-half per cent. for six months on the paid-in stock. On July 5, 1813, the company elected its managers as follows: William Wilkins, Thomas Cromwell, John Darragh, N. Cunningham, George Anshutz, Jr., W. McCandless, James Morrison, Christopher Cowan, James Adams, William Hays, George Sutton, John M. Snowden, John Morrison, James W. Nicholson, Craig Ritchie; and, on the 12th of July, William Wilkins was elected presi- dent. On January 1, 1814, the company, by its chief clerk, Alexander John- ston, Jr., called on all stockholders for the payment of five per cent. of their stock, receivable at its office on Market Street. At this date, also, the company declared a dividend of four and one-half per cent. on its paid-in stock. Its prosperity was almost unprecedented.

"The banking business has again assumed a degree of importance. The bill usually termed the 'Mammoth Bill' is resuscitated and made the order of the day for the 6th of January (1813) with every appearance of finally passing both branches" (e).

This general banking law of the State provided among other things (f): "That the several banking companies enumerated in this act shall make loans to the amount of one-fifthi of their capital actually paid in, for one year, to the farmers, mechanics and manufacturers of the district in which the bank shall

(e) Cor. of Mercury, Harrisburg, December 20, 1813.

(f) This act was passed by the Legislature on March 21, 1813; but Governor Simon Snyder returned it unsigned, with his objections, to the House where it originated; where- upon, on March 21, 1814, it passed both houses by two-thirds majority and became a law.

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be established if applied for, on sufficient surety being given by bond, mortgage or note, or otherwise, at six per cent. per annum. And whenever the Legisla- titre of the State may require it, the aforesaid several banks, having had sixty days' notice of such requisition, shall loan to the Commonwealth a sum not exceeding one-tenth of their capital stock paid in at the time such loan shall be required at an interest not exceeding six per cent. per annum, for any term not exceeding five years."

Inasmuch as this law became the basis of nearly all banking operations in the State for many years, more of its principal provisions are herein set forth. It was provided that forty-one banks should be organized under the act, two in Pittsburg, one of which should be called the "Bank of Pittsburg," with a capital of $600,000, and one the "Farmers' and Mechanics' Bank of Pittsburg," with a capital of $450,000; that commissioners appointed under the act should open books for the subscription of stock in shares of $50 each. It was further "Provided, That the commissioners appointed for the Bank of Pittsburg are hereby authorized and required on application to them made for that pur- pose by the president and board of managers of the Pittsburg Manufacturing Company, to take and consider the subscriptions bona fide made to said company as part of the stock of the said Bank of Pittsburg; but none of the said stock- holders shall be at liberty to subscribe for any of the new stock until six days after the books for subscription are opened by virtue of this act. And said president and managers of the Pittsburg Manufacturing Company shall manage the concerns of the Bank of Pittsburg (except as to the duty of commissioners) until a new board of directors shall have been organized agreeably to the pro- visions of this act."

It was also provided that each person subscribing for stock should pay $5 per share down on the same; that if fifty or more persons should subscribe not less than half the number of shares allotted to that banking district and should pay in twenty per cent. of the stock subscribed, they should be entitled to a charter; that the seven persons first named in the patent should call a meeting of the stockholders to choose thirteen directors by ballot; that the stockholders should determine where the banks should be located; that aliens and members of the Legislature should not be eligible to the directory and that stockholders should vote at follows:

"For each share not exceeding two shares, one vote: for every two shares above two and not exceeding ten shares, one vote; for every four shares above ten and not exceeding thirty, one vote; for every ten shares above thirty and not exceeding fifty, one vote; but no share nor number of shares above fifty shall confer any right of voting, nor, excepting at the first election, shall any share confer a right of suffrage which shall not have been held three calendar months previous to the day of election."

The law required that directors should make the necessary by-laws, appoint cashiers, clerks and others; that a cashier's bond should not be less than $5,000 nor more than $100,000; that the total amount of debts which the corporation might owe, "whether by bond, bill, note or other contract," excepting deposits, should not exceed double the amount of the capital stock actually paid in; that stock should be assignable and transferable on the books only; that "dividends of so much of the profits of the said several institutions as shall appear advisable to the directors of each, shall be declared at least twice a year," but dividends shall in no case exceed the amount of the net profits actually acquired by the company, so that the capital stock shall never be thereby impaired; that each institution should expend not to exceed $30,000 on grounds and buildings; that it should hold only such lands, tenements and hereditaments as were neces- sary for the transaction of its business; that it should not "deal or trade with

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any profits, stocks, money or effects in buying or selling any goods, wares or merchandise whatsover;" that the several corporations should not deal nor trade in anything but bills of exchange, gold or silver bullion, and in the stock and treasury notes aforesaid, or might sell goods really and truly pledged for money lent and not redeemed in due time, or dispose of goods which may be the produce of their lands; that each corporation should issue notes of no less denomination than $5; and that it should pay an annual tax of six per cent. on its dividends and should forfeit its charter upon failure so to pay.

The commissioners appointed to receive subscriptions for the stock of the Bank of Pittsburg were John M. Snowden, D. S. Scully, John Speer, Thomas Cromwell, George Dawson, James Martin, Joseph Wilson and Robert Highlands of Allegheny County, and others in the two other counties of the district; and those for the Farmers' and Mechanics' Bank of Pittsburg were Jacob Negley, John Neal, George Evans, John Feariss, Thomas Hazleton, George Steward and George Robinson of Allegheny County, and others in the other two counties; and the "directors of said bank shall be by trade or occupation mechanics or farmers, actually employed in their respective trades and occupa- tions." The latter restriction was changed in 1819 by the following law:

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Standard history of Pittsburg, Pennsylvania, Part 35

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