Standard history of Pittsburg, Pennsylvania, Part 40

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 40

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A great flourish was made at the time by the projectors of this (Mechanics') bank. It does not seen ever to have been incorporated, though it may have issued notes. It was referred to by the Daily American of January 6, 1841, as a "fraud." During the legislative session of 1839-40 a bill was introduced to charter the Pittsburg Bank of Pennsylvania, but did not pass.

During the early part of the legislative session of 1835-6 William Rob- inson, Jr., was charged with memorials from a number of business men of Pittsburg, and authorized to use his endeavors at Harrisburg to secure a charter for a new financial institution to be called the Exchange Bank. This was before the Pennsylvania Bank of the United States had been chartered by the Legislature and at a time thought to be opportune for the establishment here of another bank, inasmuch as the charter of the Bank of the United States would expire in March, 1836, and the Branch at Pittsburg be removed (c) .. But, unex- pectedly to these gentlemen, though such a step had been contemplated, the Legislature chartered the Bank of the United States for $35,000,000, yet it also chartered the Exchange Bank, the bill of the latter taking precedence of all other bank bills at that session of the Legislature.

Numerous petitions were sent from Pittsburg early in March, 1837, to the Legislature praying for tlie incorporation of a bank with a capital of $3,000,000. It seemed the citizens had come to the conclusion that greater banking strength would remove many, if not all, of the financial difficulties of the city and county (d). In view of the fact that surrounding states authorized their banking institutions to issue notes in less amounts than five dollars, and to the further fact that specie of small denominations was largely withdrawn from circulation in Pittsburg and vicinity, the citizens were obliged either to use the paper of small denominations of other States, issue their own paper of small denom- inations, or suffer great inconvenience in the settlement of light balances. As a matter of history, they chose what at the time seemed to be the lesser of the two evils and circulated freely their own small notes and the small notes of neighboring States, which constantly fluctuated in value, thus consigning the business man to the mercy of the broker and speculator and obliging him to charge two profits on his goods or wares in order to make one. This state of affairs continued for several years.

At half-past seven o'clock on the morning of May 15, 1837, news having been received on the 13th that the banks of New York, Brooklyn, Philadelphia and Baltimore had suspended specie payments, "a very large number" of citizens of Pittsburg assembled 'at the courthouse, pursuant to previous notice, to take some action to meet the emergency. John Tassey was appointed president of the meeting, William Hays and John Anderson, vice-presidents, and J. W. Burbridge and D. M. Hogan, secretaries. Charles Shaler, solicitor for one of the banks, moved the adoption of a set of resolutions, which motion was seconded by David Lynch. The resolutions were adopted almost unanimously and were as follows: (e)

(b) Gazette, February, 1837.

1 (d) Gazette, March 15, 1837.

(e) Gazette, May 15. 1837.

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"Resolved, That under the existing circumstances of commercial and manu- facturing embarrassment, it has become expedient that the banks of this city, following the examples already set them by the banking institutions of other great commercial cities in the Union, should suspend specie payments.

"Resolved, That we have implicit confidence in the stability of all the banking institutions of the city of Pittsburg, and in the prudence and precaution which have marked the conduct of their officers and several boards of directors; that the suspension of specie payments will not, or ought not, in the remotest degree, to impair their credit, or prevent the free circulations of their notes.

"Resolved, That we pledge ourselves to receive the notes of the banks of Pittsburg in all payments and business transactions, as heretofore, and that we recommend to our fellow citizens in town and country to give them credit and circulation as fully as though they were paid in gold and silver on demand.

"Resolved, That an immediate application be made to the Governor to call the Legislature together with all convenient speed, that measures may be adopted suitable to the present exigencies.

"Resolved, That a committee of ten persons be appointed to communicate the above resolutions to the bank institutions in the city, and to assure them that the citizens of Pittsburg will hold themselves bound to sustain them in measures they may think proper to adopt to sustain their credit and the credit of the city, under the present calamitous state of the country.

"Resolved, That the same committee prepare and circulate, for immediate signature, petitions to His Excellency the Governor, requesting a call of the Legislature.

"Resolved, That the same committee be requested to hold meetings every evening at the Merchants' Exchange reading room, in order to act according to exigencies, and to call, if necessary, public meetings in order to devise means necessary for the security of the public, and for sustaining still further the credit of the banks.

"Resolved, That the banks be requested to take immediately into considera- tion the propriety of making arrangements for the creation of a circulating medium of a denomination less than five dollars.

"Resolved, That the City Councils be requested to take into consideration the propriety of issuing small bills, to fill up and supply a circulating medium during the suspension of specie payments.

Whereupon the following persons were appointed: Charles Shaler, William McKnight, Lewis Peterson, R. N. Havens, William Ebbs, John Hays, Dr. W. A. Simpson, James Cuddy and James May. At a special meeting of the directors and officers of the banks, held at eight o'clock a. m. the same day, the following preambles and resolutions were adopted:

"Whercas, The banks in the cities of New York, Philadelphia and Baltimore have resolved on a temporary suspension of payment in specie for their notes and other liabilities, it has become the imperative duty of the officers of similar institutions in this city, with the view of preventing the entire abstraction of the precious metals from Pittsburg, to adopt measures of safety for themselves, and ultimate security for the community ; and

"Whereas, A large portion of our citizens have expressed their opinions as to the propriety of immediate and prompt action on the part of the banks in the existing emergency, and in conformity with their views; therefore it is

"Resolved, That the banks in this city, from and after the passage of this resolution, suspend the payment of specie.

"Resolved, That the directors and officers of the banks in this city pledge themselves to use their utmost exertions to confine, guard and restrict their

Char Donnelly

wdspeed : " there is

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operations, with a view to the earliest possible period for the resumption of specie payments.

"JOHN GRAHAM, President of the Bank of Pittsburg.

"Attest: John Snyder, Cashier. "M. TIERNAN, President of the M. & M. Bank. "Attest: J. Carothers, Cashier.

"W. ROBINSON, President of the Exchange Bank. "Attest: J. Forster, Cashier."

In view of the political controversy afterward growing out of the action of the meeting which passed the resolutions of suspension, more than casual mention should be given the proceedings. News of the suspension of the eastern banks reached Pittsburg Saturday, the 13th of May. With time to think over Sunday of the probable consequences of rash proceedings, the meeting was held at an unprecedentedly early hour on Monday, the 15th, before the banks had opened their doors, when resolutions favoring or recommending suspension were passed. It would appear, from subsequent correspondence and arguments on the subject, that this meeting, if not actually sanctioned or authorized by the banks, met, at any rate, their unanimous approval. All of them thought it best to suspend and did so. It is useless to speculate on what the banks would have done had not this meeting advised them to suspend specie payments. It may be stated as a reasonable certainty, however, that no bank in Pittsburg could have withstood the storm. They were unprepared for it. It was asserted in the news- papers soon afterward and in subsequent political campaigns, that the meeting was held and the resolutions were adopted for the purpose of giving the banks an excuse to suspend specie payments (f). Of course the banks then claimed and have ever since maintained that they were not obliged to suspend.

From all parts of the Union came news of suspensions, and yet the Gazette said: "We have little or no excitement upon this subject; our citizens seem dis- posed to submit with a good grace to what was imperatively necessary. Some inconvenience for want of small bills has been felt, but we trust will soon be remedied by our Councils." The canal transportation lines resolved to suspend their freightage from the East, because the commission merchants here would not receive and pay freight on goods, and because they could not collect enough money to pay State tolls and other expenses. The postmaster of Pittsburg received orders, on May 16, 1837, to take nothing but specie in payment for letters, to deposit the same in no bank, but keep it in his own possession. This act was denounced by the press and citizens generally as wholly inconsistent with the times (g). Fifty-four prominent men and business houses of Pittsburg announced, through the press, on May 19th, that they would receive in exchange for any goods they might have for sale "the scrip or certificate of city loan of the denomination of from twenty-five cents to two dollars," and recommended all others in trade to do the same. The County Treasurer, John M. Snowden, announced that the notes of the city outstanding would be received at the treasury in all payments due the county (h).

"On Monday a gentleman well acquainted with business and with the suspension of specie payments went into the Bank of Pittsburg and exchanged about $200 of silver for their banknotes, deliberately preferring the notes. On Tuesday, one of our oldest, most wealthy and experienced merchants, who began his early career in our county by honest labor at fifty cents a day, but has risen to the highest eminence by persevering industry, sent $300 of specie as a deposit to the Merchants' and Manufacturers' Bank. On Wednesday an old farmer who has lived in our county and sold his produce in our city for upward of thirty

(f) Daily Gazette, August 22, 1839

(g) Gazette, May 17-18, 1837.

(h) Harris' Intelligencer, May 20, 1837.

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years, and who owns stock in two banks, brought in his cash and took up his dividends to buy more bank stock. An old German, hearing the news, said he had in his house several hundred dollars in specie and he would give it to our banks to keep them in the hour of trial; that he was not afraid of our banks. A farmer on Thursday last, hearing that our merchants were in want of money, brought into the city a large sum to lend them in order to aid them in their distress. Now this is cheering. Let all follow the example and we will soon have better times" (h).

A public meeting was held here the 18th, in which Dr. L. Callahan, Thomas Hamilton, Z. McDonald, Orrin Newton, James Anderson, Patrick McKenna and others took a prominent part, and passed resolutions of the following import (i): That banks should be solicited to redeem with specie all their bills of the denom- ination of $5 presented at their counters, but not more than $10 at a time to any one individual, nor to any individual more than once a day; that the Branch should be required to redeem its $10 notes on demand; that each bank should make an immediate report under oath of the condition of its affairs-amount of debts, credits, nature and amount of securities, and the amount of specie on hand, and that the banks should be required to publish their discounts, names of individ- uals, the several accommodations, etc. To this communication the banks replied that the suspension had resulted from the recommendation of one of the largest meetings of the citizens ever held in the city; that such a course was necessary for the present; that it would not be prudent to attempt to withdraw from circulation the $5 notes as suggested, because such bills constituted the largest amount issued by the banks; that such a course would be almost equivalent to a resump- tion of specie payments; that the Auditor-General of the State alone was author- ized to call upon banks for a statement of their affairs; that to reveal for publi- cation individual names, discounts, accommodations, etc., would establish a system of espionage into personal affairs totally subversive of all usages and practices, and that all the banks were entirely solvent and were prepared to resume specie payments the moment the banks of Philadelphia should open their vaults. Dr. L. Callahan, one of the committee of the 18th, in a speech at the meeting, declared "that if he had command of the arsenal he would compel our banks to pay specie" (j).

On May 17, 1837, Charles Shaler, Lewis Peterson, William Ebbs, John Hays, William A. Simpson, William McKnight, R. N. Havens, James Cuddy and James May, the committee appointed for that purpose, addressed a communica- tion to the local banks, reciting, among other things, that they and the city were to be congratulated that not a single failure had resulted from the suspension of the banks and the existing monetary crisis; that the action of the citizens in recommending the suspension of specie payments here had been interposed to shield the banks from odium and save their credit; that, therefore, the citi- zens had the right to look to the banks for judicious arrangements to meet their current engagements; that new loans should be avoided to prevent a recoil, and ended by asking the positions of the banks on these questions, with a view to an early resumption.

The banks answered that the suspension of specie payments was a measure of precaution and not a necessity, either to the banks or to their patrons, and that all were in a sound and healthy condition; that had any other course been pursued all the specie here would have poured eastward; that the large manu- facturing establishments, erected at great expense and giving employment to many people, must be sustained, and that the banks were disposed to manifest a "liberal feeling to the community." To this answer were signed the following

(h) Harris' Intelligencer, May 20, 1837.

(j) Gazette, May 20, 1837.

(i) Gazette, May 20, 1837.

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names: John Graham, president Bank of Pittsburg; John Snyder, cashicr Bank of Pittsburg; Michael Allen, president Pennsylvania Bank of the United States; James Correy, cashier Pennsylvania Bank of the United States; Thomas S. Clark, president pro tem. M. & M. Bank; Jessie Carothers, cashicr M. & M. Bank; William Robinson, Jr., president Exchange Bank; John Forster, cashier Ex- change Bank. In February, 1837, the banks and officers were as follows:

Bank of Pittsburg .- Discount days, Wednesdays and Thursdays-notes must be offered the days previous. President, John Graham; cashier, John Snyder; directors, James Irwin, James Brown, Lewis Hutchison, Hugh McShane, John Irwin, John Caldwell, Nathaniel Holmes, John L. Davis, John Bissell, William Holmes, Benjamin Darlington and Charles Avery.

Merchants' and Manufacturers' Bank .- Discount days, Mondays and Thurs- days-notes must be offered on Saturdays and Wednesdays. President, Michael Tiernan; cashier, Jesse Carothers; directors, Frederick Lorenz, George A. Cook, Thomas Scott, F. G. Bailey, Isaac Lightner, Thomas S. Clark, Samuel Fahne- stock, John H. Shoenberger, George W. Jackson, Samuel Church and William M. Lyon.

Exchange Bank .- Discount days, Tuesdays and Fridays-notes to be offcred by 3 o'clock p. m. the days previous. President, William Robinson, Jr .; cashier, John Forster; directors, Tobias Myers, W. G. Alexander, Samuel Lothrop, B. A. Fahnestock, H. S. Chadwick, George A. Bayard, George Wal- lace, Samuel Baird, James E. Ledlie, James W. Brown, Reuben Miller, Jr., and Harvey Childs.

Pennsylvania Bank of the United States .- Discount days, Tuesdays, Thurs- days and Saturdays-notes must be offered the. days previous. President, Michael Allen; cashier, James Correy; directors, William W. Irwin, John M. Snowden, Jacob Forsyth, William Wade, Moses Atwood, P. Mulvaney, Thomas Bakewell, Jesse Lippincott, William Bell (two vacancies).

Pittsburg Savings Fund Co .- Discount day, evcry Tuesday-notes must be offered on Monday. President, James H. McClelland; treasurer, James M'Auley; secretary, John B. Bell; directors, Reuben Miller, Jr., James Marshall, G. E. Warner, Joseph Long, G. Adams and William Douglass.

Late in May, 1837, several private individuals began to issue small bills of their own; but this was discountenanced by the press and the better class of business men. During the summer of 1837 the people had abundant time and an urgent inclination to study the various banking systems-the safety fund, the private, the State and the National-in fact, it was a period of education in finance, a study of money and of credit.

On June 1, 1837, Zantzinger McDonald, Orrin Newton, James Anderson, Patrick McKenna, Thomas Hamilton and Dr. L. Callahan, committee, called "a meeting of all citizens opposed to the banking system of the United States and in favor of the constitutional currency, gold and silver," to be held the same evening at the Washington Coffee-house. This may be said to have been the first distinctly hostile movement to the use of paper money and in favor of gold and silver only ever begun in Pittsburg. These men were really the pioneer hard-money mcn of the city. They werc ultra-Jacksonians. Their organ was the Manufacturer, and later the Constitutionalist. At the meeting Mr. McKenna was made chairman and J. P. Avery and Henry Wagoner secre- taries. Their proceedings werc mainly political, though the following resolution, among many offered by Henry Wagoner, was adopted unanimously, on motion of Dr. Callahan :

"Resolved, That we decidedly disapprove of the establishment of a United States Bank to restrain the over-issues of the State banks, inasmuch as the National Bank would require some restraining power to compel that to

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perform its duty faithfully to the community as much as the State institutions would."

The Bulletin and Manufacturer took a strong anti-bank position, and, in con- nection with the Van Buren ticket, announced that it was "opposed to the United States Bank and to all other banking corporations by which the people, the working and productive classes, are robbed of gold and silver, the only legal rewards of their industry."

"Money is very scarce with us, paralyzing every department of business. Things begin to wear a brighter aspect in the money market in the Eastern cities, and will, we hope, soon reach us. Let us patiently persevere and hope for better times" (k).

As a matter of history it should be stated that the recommendations of the public meeting of May 15, 1837, addressed to the banks to suspend temporarily the payment of specie, were prompted partly by the wholesale wish to benefit the whole community, including the banks, and partly by the political desire to shield the pet banks of the administration from a calamity that would be rebuked by the people at the polls in future elections. A large part of the population was then and soon afterward strenuously opposed to the suspension, and it is possible, though not probable, that the Bank of Pittsburg, if not the others, might have continued to pay specie throughout the panic and come through the storm with still greater renown. The banks at the time declared they were not obliged to suspend, but would yield to the resolutions of the public meeting (1).

Pursuant to notice, a meeting of citizens was held at the courthouse on Saturday evening, August 19, 1837, "for the purpose of taking into considera- tion the conduct of the city banks." Cornelius Darragh was chosen president, John B. Guthrie and John M. Snowden, Jr., vice-presidents, and Dr. E. D. Gazzam and Isaac Harris secretaries. Dr. L. Callahan was the principal speaker of the evening. He denounced shinplasters and bank issues of all kinds, as well as the issues of city councils or individuals, and introduced a set of resolutions, which was laid upon the table. He was supported by Joseph Barker, but opposed by Z. McDonald, editor of the Bulletin. John B. Guthrie then intro- duced another set, which, though much milder in tone, was likewise rejected. Finally a resolution was adopted "to appoint a committee of fifty to demand of the city banks a resumption of specie payments on or before the 25th inst." The Gazette said: "On the whole the meeting was the most uproarous we ever attended." That paper further said: "The course pursued by some of the banks in regard to a number of our best business men, within a week or two past, has caused much excitement; and, perhaps, a meeting of business men and respect- able citizens might recommend measures which would be productive of good at the present time." The fact is that a large part of the community could not rid themselves of the idea that they were entitled to exercise a sort of paternal- ism over the banks and require them to submit to partial domination and reveal the mysteries of their operations and existence.

"We learn with pleasure that this institution (Exchange Bank of Pittsburg) has made an arrangement by which its notes will be received on deposit and at par in the Philadelphia banks. This is the first instance of the kind that has occurred with regard to any bank west of the mountains, and it cannot be too warmly commended. While the notes of many of the Western banks are at a discount of from two and one-half to five per cent., those of the Exchange Bank pass as rapidly as those of any of our Philadelphia institutions. General Forster, the cashier, is one of the first business men of the State" (m).

(k) Harris' Intelligencer. July, 1837.

(1) Gazette, August 2, 1837. (m) Bicknell's Reporter.

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"As was generally expected, the committee of fifty have not been able to persuade our city banks immediately to resume specie payments" (n).

"A moment's reflection will be sufficient to satisfy every man that an immedi- ate resumption of specie payments by the banks in this city, without a cor- responding course on the part of those of the East, would give a shock to the industry and prosperity of Pittsburg, from the effects of which she would not recover for years" (o).

At another meeting held September 2, 1837, the committee of fifty reported that all the banks had courteously replied to their request to resume the pay- ment of specie, but had not shown a disposition so to resume until such a course was adopted by other banks throughout the country. The report was not favor- able to the banking system generally, but expressed the belief that the city banks were perfectly solvent institutions and had been judiciously managed (p).

In November, 1837, the balance of trade between Ohio and Pennsylvania was in favor of the latter, resulting in a great advantage to the Pittsburg banks. The latter demanded their own notes, or the notes of banks in Western Penn- sylvania, or exchanges on the East, at par or one-half of one per cent. advance; and, as the Ohio banks were unable to comply, demanded the specie or a certifi- cate bearing twelve per cent. interest, which the Ohio law obliged them to pay in case they refused to pay specie. The local banks, upon the refusal of the Ohio banks to comply with the latter demand, directed their attorneys to begin suit (q).

By ordinances of May 16, 1837, July 7, 1837, and January 29, 1838, the city of Pittsburg issued small notes to the amount of nearly $100,000. On Sep- tember 24, 1838, the Mayor was authorized to borrow of the Exchange Bank $100,000 with which to redeem such issues, and made that bank the sole deposi- tory of the city funds during the period of the loan. The borough of Alle- gheny, through its treasurer, John Morrison, also advertised that its certificates of loan would be redeemable at the Exchange Bank of Pittsburg and the treas- urer's office (r). By January 9, 1838, the borough of Birmingham had issued scrip to the amount of $35,000, and had previously authorized the issue of $60,000. R. A. Bausman was burgess.

It was urged by the newspapers that a run upon a bank was the sheerest nonsense. No bank, unaided, could live through a severe run upon its cash. When business men would learn this fact and learn to require from banks proper and conservative banking methods, no run would be precipitated nor such a course of folly be permitted to paralyze business. The man of business, as well as the man of finance, was declared responsible for the suspension of specie payments, for financial panics and for the failure of banks and business houses. The sooner this was realized the sooner a safe business in all departments of industry could be conducted.

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Standard history of Pittsburg, Pennsylvania, Part 40

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