Standard history of Pittsburg, Pennsylvania, Part 38

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 38

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).

But no improvement took place in the affairs of the bank. Its notes were soon at one per cent. discount in Pittsburg, and before long were rejected entirely by the banks of Philadelphia. In February, 1819, the State Treasurer refused to receive them at any discount. In November, 1819, they were four per cent. discount in Pittsburg.

"In order that the public may have a correct conception of the value of the notes of this bank, it is thought necessary to state that the amount of notes in circulation does not exceed $9,000, while the debts due the bank amount to $118,000, which have been loaned to the most solvent individuals in this city and its vicinity in small sums, and which, it is confidently presumed, can be collected without difficulty and at a trifling expense.

"By order of the board.

JOHN SCULL, President."

"Whereas, From the embarrassment of the times all banking operations, even of the ablest institutions, are so seriously shackled as to deprive them of every useful feature; and, Whereas, The utility of the Farmers' and Mechanics' Bank of Pittsburg has, by its unfortunate robbery in 1818, been in a particular inanner destroyed so as to render any attempt at continuance unprofitable and unpopular ; therefore,

"Resolved, That the affairs of the Farmers' and Mechanics' Bank of Pitts- burg be wound up as soon as the nature of the case will admit" (r).

The bank was many years in closing up its career; in fact, it continued to do a small and uncertain business until about the year 1825. By failing to pay the tax required by law on its dividends it forfeited its charter in 1821, although it still continued to transact an insignificant business. The following act may be said to have terminated its career: "That all the corporate powers, rights and privileges heretofore exercised and enjoyed by the Farmers' and Mechanics' Bank of Pittsburg, under their charter, be and the same are hereby declared to be in full force for the liquidation and settlement of their transactions and accounts until the same are fully liquidated and settled, and no longer, nor for any other purpose" (s).

In 1817 a number of gentlemen established the "City Bank of Pittsburg" on Wood Street, of which Rev. Robert Patterson became president and Anthony Ernest cashier. The bank issued a considerable quantity of its notes-how large a quantity it not known-and accommodated business men with discounts. On January 20, 1818, the State Treasurer, pursuant to law, published his annual list of all the banks or associations for the purpose of banking, and individuals or corporations issuing orders or notes payable to bearer or order in the manner or

(q) Gazette, March 19, 1819. Statement authorized by the board of directors and signed by Morgan Neville, cashier.

(r) Action of the directors July 20, 1819.

(s) Act of April 12, 1825.

339

HISTORY OF PITTSBURG.

nature of banknotes, among which was the City Bank of Pittsburg. This asso- ciation was not incorporated, but issued its paper "in the nature of banknotes" (t). In July, 1820, the notes of this bank were at par, and continued to circulate for several years later. This institution was referred to as late as 1823 (u). After the bank closed Mr. Patterson, who kept a large bookstore, continued to redeem the notes as they came home.

In 1833 the Merchants' and Manufacturers' Bank of Pittsburg was estab- lished. The following commissioners were appointed to carry into effect the pro- visions of the act: Jacob Forsyth, Michael Tiernan, Samuel Smith, Thomas S. Clarke, Samuel Church, James Adams, Jr., William Stewart (merchant), Robert S. Cassat, Josiah King, Edward D. Gazzam, Andrew Watson, William M. Car- lisle, George Miltenberger, William Holmes, George Ogden, Cornelius Dar- ragh, George A. Cook, William Marks, James B. Irwin, William Robinson, Jr., Samuel Walker, Samuel Fahnestock, Richard Grey, John Sampson, Joseph Oliver, Thomas Scott, James Kittey, James S. Craft, Samuel Pettigrew, William B. Foster, David Lynch, Charles H. Israel, Humphrey Fullerton, Jr., William Eichbaum and Robert C. McFarland. It was provided that the capital stock should not exceed $600,000 at $50 per share; that the stock should be sold at public auction in Pittsburg; that each purchaser might take not to exceed thirty shares, and that he should pay at the time of purchase $5 on each share of stock, in addition to the premium at which the stock should sell.

The first board of directors consisted of Michael Tiernan, Trevanion B. Dallas, Isaac Lightner, Jacob Forsyth, George A. Cook, Frederick Lorenz, Thomas Scott, Thomas S. Clarke, Samuel Fahnestock, Francis G. Bailey, Samuel Smith, John H. Shoenberger and Samuel Church. Michael Tiernan was elected first president, James Correy first cashier, Thomas S. Clarke and Samuel Smith tellers. At the first meeting of the board (June 5, 1833) a committee had been appointed to visit James Correy, cashier of the Branch, to tender him the same position in this bank. A lot on Fourth Street was purchased for $7,500, and preparations were made to erect thereon a suitable building for occupancy, in accordance with plans presented by Thomas Scott, the cost to be $6,400. On November 5, 1833, the first dividend of fifty cents on each share was declared. From December 20, 1834, to January 9, 1835, this bank issued its own notes to the amount of $96,000. By act of April 1, 1835, the bank, which, before that date, had been required to pay a tax on its dividends, was released from such obligation.

The Legislature, in 1834, enacted that Harmar Denny, Michael Tiernan, Ste- phen Colwell, John McKee, William Bell, Jr., John D. Davis, Sylvanus Lothrop, John Arthurs, Thomas S. Clarke, Thomas Bakewell, Alexander Laughlin, John Graham, James Ross, Jr., John Caldwell, Samuel Roseburg, Samuel Church, Abishai Way, Alexander Brackenridge, A. Holmes Hodge, George Ogden, Gabriel Adams, Malcolm Leech, Hugh Davis, Frederick Lorenz, Adam Hays, Thomas Hind and James R. Speer, and all other persons becoming members, · should be created a corporation, to be styled the "Pittsburg Savings Institu- tion." They were permitted to hold real estate (except under security engage- ments) not to exceed the value of $5,000, to have a capital of not less than $25,000 nor more than $200,000, in shares of $25 each, and it was provided that such capital should be liable at all times to the demand of depositors; that shares should be transferable on the books of the company; that affairs should be man- aged by seven trustees, elected annually ; that the necessary officers of the institu- tion should be elected by the trustees; that the corporation might invest its funds in the public stocks of this State, the United States and real securities, and in discounting notes and personal securities the rate of discount not to

(t) Franklin Republican.

(u) American State Papers, Vol. IV.

340

HISTORY OF PITTSBURG.

exceed one-half per centum for thirty days, nor could promissory notes, bills, bonds and other negotiable securities be purchased at a greater rate of discount; that the institution might receive. deposits in any sum not less than $1, to be paid to such depositor with such interest as might be agreed upon, providing the amount of the deposit should be at least $5, and that depositors, under certain conditions, should be eligible to membership after six months (v). The office of this institution was located on St. Clair Street, near the Allegheny bridge. James Fulton was first president, James Anderson secretary and Reuben Miller, Jr., treasurer. The institution advertised to receive deposits and pay interest, as follows: Deposits for thirty days, three per cent .; for sixty days, three and a half per cent .; for ninety days, four per cent .; for six months, five per cent. (w). Business had been done for several years before the passage of the act of incor- poration under the name of the "Pittsburg Saving Fund Company."

"We are gratified to learn that the Pittsburg Saving Fund Company is in a condition of prosperity far beyond what its projectors anticipated. It com- menced business about three years ago (about 1831) by each stockholder paying in the sum of $10 and continuing the payment of $2 per week ever since. These weekly payments are, by the charter, to be continued for ten years, and we have been informed that not a single instance of omission of payment has yet occurred. It is understood that the actual funds on hand upon which the business is done amount to about $40,000, and this sum receives every week a large accession" (x).

In the crash of 1837 this bank seems to have led a quiet existence, and no doubt its operations were limited to its capital and the perils of the hour. Late in 1840 its officers were: Gabriel Adams, president; Thompson Bell, treasurer; W. G. Alexander, secretary. By act of March 19, 1841, the name of Pittsburg Saving Fund Company, which had been previously adopted, was changed to "The Farmers' Deposit Bank of Pittsburg," which was authorized to increase its stock and deposits to $500,000, thus repealing the law of 1837, which limited the capital and deposits to $200,000. Its directors were James Marshall, Joseph Long, James McCauley, William Young, Henry McGeary and William Doug- lass (y). After this date it figured in all the financial operations of this vicinity.

The Legislature enacted in 1828 that notes of denominations less than $5 should be withdrawn from circulation, and from all portions of the State, includ- ing Allegheny County, came remonstrances for the repeal of the law. In Decem- ber, 1828, a committee of the Legislature was appointed to examine these remon- strances, investigate the condition of affairs and the probable effect of the law, and report thereon. The report bears date December 19, 1828. The petitioners from Allegheny County were answered by the committee that trade was an inter- change of commodities and not of banknotes; that it was very important that small change should not be depreciated nor spurious; that the law would put out more silver in small denominations and thus cure the evils complained of; that silver could be obtained from any sound bank in redemption of its paper; that portions of the State, including Pittsburg and vicinity, had been vexed by the circulation of small notes of uncertain or no value; that to repeal the law would bring out floods more of it; that the greatest loss fell upon the poor man, owing to his inexperience in detecting counterfeits and in knowing solvent from insolvent banks; that the law would probably end the career of banks in neigh- boring States that were issuing small bills and circulating them along the bound- ary; that travelers could not drain the county of its specie if the' people had anything to sell which the travelers desired to buy; that the bill was aimed partly at those contractors on the many internal improvements then in progress in the

Act of April II, 1834. (w) Gazette, March 21, 1834.

(x) Pittsburg Times, November, 1834. (The amount paid in was overestimated.)

(y) Gazette, January I, 1842.

34I

HISTORY OF PITTSBURG.

State, who purposely secured these notes from outside banks on very liberal terms, with which to pay their workmen, and that some of these small outside banking concerns used the name of New York or Philadelphia, with the word "near" obscured and in small letters, for the purpose of catching the inexperi- enced of careless. They further reported that

"It would appear from all the acts passed to regulate the currency of this State that the settled policy of Pennsylvania was to prohibit the circulation of small notes, inasmuch as banks incorporated by her acts are prohibited from issuing notes of a less denomination than five dollars; and your committee can- not but view with deep concern any attempt made to change that policy adhered to for the last twenty years, with the exception of a short time during the war, when circumstances rendered it necessary to suspend specie payments, the effects of which, though at the time unavoidable, are felt even to this day. For the last two years exertions have been made and acts passed to perfect that policy, and it was confidently expected that the act of the last Legislature would have been regarded and suffered to go into operation so as to fully test its effects by experience before any portion of our fellow citizens should have thought proper to petition for its repeal. By the terms of the act the circulation of small notes is not prohibited until after the Ist of January, 1829; more than eight months was thus allowed to prepare the public for the change. As yet no evils can have been suffered by the petitioners, and until some specific injury or inconvenience is pointed out, your committee trust that the house will perserve in a system which not only had the assent of a large portion of the last Legislature, but was received with joy by the community in general" (z).

As a matter of fact Pittsburg at this time was enjoying one of the most prosperous times in her history. Large sums of money were being spent by the State in numerous public improvements, and all branches of business were infused with an activity as unusual as it was enjoyable. Prices of all kinds went soaring. Flour jumped from about $5 to $8 and $9 per barrel (a). Hotels were crowded to their utmost capacity with strangers looking for promising fields of invest- ment. All this was true, in spite of the fact of the dearth of small and reliable change, complained of by the petitioners. In the Legislature Mr. Petrikin of Center offered a resolution, permitting the Bank of Pittsburg to issue bills of less denomination than $5, but it failed to become a law.

"If our banks were permitted to issue a limited amount of two-dollar bills, it would mitigate the evil complained of and at the same time keep in circulation a convenient proportion of silver; for neither one dollar nor three dollars could be paid or exchanged, nor could change be made for a five-dollar note without the aid of specie. With this privilege to our banks the prohibition of foreign small notes would be an advantage to the community" (b).

On February 26, 1825, the City Council enacted that $6,000 should be issued in city bills of the denomination of one and two dollars, bearing interest from date, "for the redemption of old, worn and defaced city bills now in circulation," 'the same to be redeemed from fincs, forfeitures, debts and taxes; and the cor- porate property of the city was pledged for their redemption. On January 29, 1827, a new issue of city bills of the denomination of one and two dollars was ordered to be circulated by the City Treasurer; and again on October 29, 1827, $5,000 in new bills was issued to replace old and worn bills, under the above conditions.

In September, 1826, Pittsburg city bills were at a discount of one and one-

(z) Gazette, December 26, 1828.

(a) This was probably the first "corner" on that commodity ever introduced into the Pittsburg market. The canal contractors engineered it successfully.

(b) Gazette, January 20, 1829.

342

HISTORY OF PITTSBURG.

half per cent., but in August, 1827, were quoted at one per cent. discount, and so continued during the balance of the year. In November, 1827, the city emitted $5,000 in one and two dollar bills, bearing interest from date, for the purpose of redeeming its torn and defaced paper then in circulation. On Decem- ber 24, 1827, the city had in circulation of these bills $12,389.69. They bore interest and were at a discount, but they, as well as the water certificates, which also bore interest, circulated freely in this vicinity, owing to the scarcity of small change. By December 29, 1828, there were in circulation city bills to the amount of $14,625, and they were still at a discount of one per cent. The water certificates outstanding at this time amounted to $59,900.

During the fiscal year ending December, 1831, the United States Bank extended its loans over previous accommodations to the amount of about $20,000,- 000. In 1832, while its petition to be rechartered was pending in Congress, it had outstanding loans to the amount of nearly $70,000,000. In 1832 President Jack- son vetoed the bill to recharter the Bank of the United States, which occasioned much excitement throughout the country, and particularly at Pittsburg, where the news was received in July, and where extensive and liberal banking accom- inodations were necessary for the prosperity of manufacturing and other enter- prises. In the summer and fall of 1833 the hostility threatened serious conse- quences. As early as July, 1833, the directors of the Bank of the United States became convinced that President Jackson contemplated severe measures, where- upon they gave orders to all the branches to shorten the time of their loans, and took other measures to protect themselves. By the middle of August the Branch here had already curtailed its loans to a considerable amount, against (c) the earnest remonstrances of many business men. At this time the directors of the parent bank, anticipating the threatened removal of the Government deposits from its vaults, passed resolutions not to increase the amount of bills discounted, nor to allow bills of exchange, except in its five Western branches, to run longer than ninety days. On September 24th they gave orders for the removal of much of their reserves to the Atlantic cities. On October 1, 1833, they included Pitts- burg in these limitations and restrictions, and gave orders that all branches should purchase bills on Atlantic cities and for a period not to exceed ninety days. The receipt of State bankbills was restricted to the banks, where the branches were located. When the Government deposits were actually withdrawn by President Jackson early in October, 1833, there was intense excitement in Pittsburg; and the Branch here, to save itself from serious injury, began to cur- tail its loans to a degree that threatened to prove embarrassing to many of its patrons and injurious to the enterprises of Pittsburg, though, upon investiga- tion, this is shown not to have been the result. However, during the year 1833, the reduction of its loans at Pittsburg amounted to about $577,000.

"Since the Ist of January, 1833, the Bank of Pitttsburg, by calling in her unpaid installments of stock, had been enabled to increase her loans from about $850,000 to $1,120,000, having an increase of $270,000. The Merchants' and Manufacturers' Bank of Pittsburg had in the meantime been created, and had discounted bills and notes to the amount of $382,000, thus affording increased accommodation to the amount of $652,000 from these two banks. We should suppose that even our Senator [William Wilkins-Ed.] will admit that the time when these two local banks were extending their discounts was a very proper time for the United States Bank to contract hers.

"Another fact our distinguished Senator might have mentioned in explana- tion of the reduction of discounts here: When the new bank went into opera- tion Mr. Correy, the old and very popular and courteous cashier of the Branch, was elected cashier of the new bank, and thus many persons were induced to

343

HISTORY OF PITTSBURG.

transfer their accommodations from the Branch to the Merchants' and Manu- facturers' Bank" (d).

"In publishing the amount of the discounts of the Merchants' and Manu- facturers' Bank yesterday we relied upon the return made by the officers of that bank up to the Ist of October. Between that time and the Ist of January, 1834, this bank has called in several installments of stock, and her discounts, on the 3Ist of December last, amounted to $665,000, which, added to the increased dis- counts of the Bank of Pittsburg, amounts to $935,000, exceeding the reduction in the Branch by $358,000, thus showing conclusively that the pressure here is not owing to any reduction in the amount of banking capital, but to the want of a bank with the greatest facilities for transacting the exchange business" (e).

"The Bank of Pittsburg and the Merchants' and Manufacturers' Bank of Pittsburg yesterday adopted resolutions expressive of their opinions in relation to the present pecuniary pressure and in favor of the restoration of -the deposits to the Bank of the United States as the only remedy" (f).

"No serious pressure in our money market existed prior to the Ist of December, although the loans in the United States Branch were lessened during the last year about $700,000; but no pressure was felt, for the simple reason that the other banks furnished to the community the amount called in by the Branch. Our city banks cannot now purchase one-fourth of the domestic bills required for mercantile and manufacturing operations, and the Branch has been compelled to decline this business entirely in consequence of the vindictive, unrighteous war waged against her. The pressure in our money market is con- sequently very great and must soon be much greater.

"It is well known that the manufacturing interests of this city are the main foundation of her prosperity. If these should be compelled to stop their opera- tions, property would depreciate fifty per cent. in less than six months, and there would not be one dollar in circulation where there are now ten or fifteen. The population would decrease one-half in less than six months. The neighboring farmers would get but little for their produce; most of the vendors of foreign fabrics would be compelled to close their shops, and Pittsburg would be a gloomy, deserted city" (g).

Hon. William Wilkins, then a member of the United States Senate, sus- tained the attitude of the President toward the Bank of the United States. He declared in the Senate in January, 1834, that there was no real distress in the Western country; that real estate in Pittsburg was higher than ever before, and that farmers, manufacturers and merchants were doing well at good prices. Despite the fact that he had read of the distress here in the local newspapers sent to Washington, and in private letters written to him, he made this strong statement in the Senate, and, by so doing, fired with resentment the anti-Jack- sonian element of this vicinity. Convinced of the reality of the pressure here, but wrongly attributing it to the removal of the deposits, they determined to com- . municate directly with Congress in a manner that could not be misrepresented nor misunderstood.

On Monday evening, January 20, 1834, "a very respectable and numerous assemblage of the citizens of Pittsburg convened at the house of George Beale," to take into consideration the representations made by Mr. Wilkins in the Sen- ate and the causes of the monetary evils of the times. Thomas Fairman was elected chairman and George W. Jackson and S. P. Darlington appointed secre- taries. A committee of three persons, consisting of W. W. Fetterman, Lewis

(d) Gazette, February 12, 1834.

(e) Gazette, February 13, 1834.

(f) Gazette, February 12, 1834.

(g) Cor. Gazette, January 30, 1834. (The Gazette was now the stanch friend of the Bank of the United States.)

344

HISTORY OF PITTSBURG.

Peterson and Thomas S. Clark, was appointed to prepare resolutions expressive of the sense of the meeting; and another committee of three, consisting of W. W. Fetterman, N. B. Craig and George Grant, was chosen to prepare a memorial addressed to Congress and the State Legislature on the subject of the meeting, and to secure the signatures of citizens to the same. To assist the latter com- mittee, others, consisting of four citizens from each ward of the city and from the suburban boroughs, were appointed. The meeting was large and enthusias- tic. Among the resolutions adopted were the following:

"Resolved, That a very great pressure exists at this time in the money market of our country, and that its inevitable tendency is to cripple and destroy our mer- cantile and manufacturing business, unless the evil is speedily remedied.

"Resolved, That, in our opinion, the removal of the deposits was an unwar- rantable stretch of power on the part of the Secretary of the Treasury, in direct violation of the contract made with the Bank of the United States when she was chartered; that it is sanctioned by no law and justified on his own showing by no public necessity.

"Resolved, That the effects of that removal have been to create the severe pressure already adverted to, which now operates on all classes of the commun- ity and threatens to paralyze all the active industries of the country.

"Resolved, That we deprecate the measure as fraught with injury to the currency of the country, as the mother of a horde of State banks, subject to no control, and that we can but anticipate a renewal of the dismal scenes of 1817 to 1820, when all credit was destroyed, business stopped, our men of industry and enterprise ruined, and half the real estate in the community sold at sheriff's sale.

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.

Standard history of Pittsburg, Pennsylvania, Part 38

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