USA > Pennsylvania > Allegheny County > Pittsburgh > Standard history of Pittsburg, Pennsylvania > Part 41
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In 1837 and 1838 large quantities of Ohio bankbills, at a discount of from five to eight per cent., circulated in Pittsburg. It was said that the notes of the Pittsburg banks, notwithstanding the suspension, passed almost as well here as gold and silver (s). In the summer of 1838 the repeal of the "Specie circular" by Congress caused great rejoicing among the Whigs of Pittsburg and Alllegheny.
"Our Pittsburg banks are all discounting good business paper and good drafts at short dates on the East or West. We have conversed with many of our leading men of business and we find a general impression that a more happy period is at hand. When that Monster in Philadelphia begins to hand out the
(n) Gazette, August 26, 1837.
(p) Gazette, September 4. 1837.
Bulletin, August. 1837.
(q) St. Louis Republican, November, 1837.
(r) Gazette, October 20, 1838. (s) Gazette, May 25, 1838.
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hard money all the little monsters will join in concert, and we shall then enjoy all the benefits that the constitutional currency can bestow" (t).
On July 10, 1838, Governor Ritner issued a proclamation, pursuant to law, requiring all the banks of the State to pay specie on and after August 13, 1838, and on July 18 a large meeting of citizens convened at the courthouse to consider the situation. William Eichbaum was chosen president; C. Darragh, B. M. Lowrie, Thomas Bakewell, R. M. Riddle and S. M. Darlington, vice-presidents ; William McCandless and M. Robertson secretaries. On motion of P. J. Mait- land the proclamation of the Governor was read and received with rounds of applause. On motion of R. N. Havens the following committee was appointed to prepare resolutions: W. W. Irwin, P. J. Maitland, R. N. Havens, T. M. Howe and A. W. Foster, Sr. While the resolutions were being drafted the meeting was addressed by W. W. Irwin and A. W. Foster, Sr. Among the reso- lutions adopted were the following (u):
"Resolved, That this meeting cordially approve of the proclamation of Gov- ernor Ritner, requiring the banks to resume specie payments by the thirteenth of August next.
"Resolved, That this meeting recommend to all the banking institutions of this city the propriety of acquiescing in Governor Ritner's proclamation and of contributing by all lawful means to aid him in restoring the currency.
"Resolved, That this meeting also recommend to the city of Pittsburg and all other corporations within the county of Allegheny the propriety of adopting Governor Ritner's suggestion, and of taking instant measures for the full and honest redemption of any notes which they may have issued and put into circula- tion under the denomination of five dollars."
It was also determined by resolution to celebrate the 13th of August, the day fixed for resumption, and to appoint a committee of one hundred to make arrangements therefor. An immense meeting was held on that occasion on Beale's Island. Mr. Darragh, as chairman of the committee of one hundred, called the assemblage to order, and, on motion, William Leckey was made presi- dent. W. W. Irwin read the Governor's proclamation. The meeting was then addressed by Judge Brackenridge and Messrs. Parker, Black, Darragh and Elder. Resolutions expressive of the joyful sense of the meeting were adopted (v). Previous to this date, in answer to letters addressed them by a special commit- tee, consisting of E. D. Gazzam, Thomas Hamilton, Robert Porter and J. B. Butler, the banks had replied favorably to the demand for resumption. The Bank of Pittsburg had said, on August 6: "In answer to your note of this date we will briefly state that this bank is now paying specie for all demands made by presentation of its notes; that it has been doing so for some time past for reasonable demands; and that it had been prepared to pay specie for all its liabil- ities for some months past, provided the banking institutions East and West had gone into a course of action to warrant payments of this nature." The Exchange Bank replied: "That this institution, during the greater part of the suspension, but rarely refused to pay their bills of the smaller denominations in specie when demanded; that for some considerable time past its payments in specie have been much enlarged on all its obligations; and that at all times it has been prepared to cooperate with the other banks of this Commonwealth in a general resumption, and will simultaneously with them resume the payment of specie for all its responsibilities." The Merchants' and Manufacturers' Bank answered that "this bank is now paying specie for all demands upon it, and has been doing so for the last two or three months."
All the banks of the city had thus anticipated the action of the Governor
(t) Harris' Intelligencer, June I, 1838.
(u) Gazette, July, 1838. (v) Gazette, August 14, 1838.
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and had resumed the payment of specie, without friction and without excite- ment, though not without restoring a happy sense of confidence to business men. Subsequent events proved this resumption to have been premature; or rather, to state the facts more correctly, "tinkering with the currency" caused another suspension. "Money continues very scarce, disagreeably so, and is a great drawback to our otherwise flourishing business, but we hope a few days will make a pleasing change for the better in our money markets" (w). During the winter of 1838-9 money continued extremely "tight" at Pittsburg. Com- plaints of its scarcity were of constant occurrence. "The scarcity of money and the depreciation of much of what is in circulation are the greatest drawbacks just . now experienced." "Money is tight, and this is the only drawback we can see." "Money is tight; the banks are discounting very sparingly." "Money is ex- tremely scarce and the complaints of the merchants are quite as loud as ever. A few Western buyers are in the market and so far they bring fair supplies of money. It is expected that relief from this source will be felt in the next fortnight" (x).
An anti-bank meeting (political) was held at the Washington Coffee-house on Saturday evening, September 7, 1839, of which James Hamill was made chairman and J. H. Smith and Thomas Hamilton secretaries. Dr. L. Callahan, Thomas Hamilton and W. H. Smith were appointed a committee to prepare reso- lutions. They reported a long set, among which were the following (y), which, although adopted, met with considerable opposition :
"Resolved, That every bank in the State of Pennsylvania is a breach of the United States Constitution, which is the supreme law of the land; that when a legislature accepts a bonus for granting a bank charter, it is nothing better than taking a bribe to enable the few to rob the many; that the Attorney-General is solicited to take immediate cognizance of the mass of illegal paper currency in this city, consisting chiefly of one, two and three dollar bills of the Ohio banks; that when any bank within this Commonwealth suspends specie payments the Legislature shall mulct them in twenty-five per cent. per annum during said term of suspension."
It was reported in September, 1839, that certain individuals in Pittsburg were in the practice of buying notes of Ohio banks of less denomination than $5 at a considerable discount, and paying the same out at par to mechanics, laborers and others in their employ (z). At a political meeting, held in Myers' Long Room, September 18, 1839, on which occasion Benjamin Weaver presided, a committee, consisting of D. F. Miller, John Shipton and George Steward, pre- pared and presented, among others, the following resolution:
"Resolved, That the following are facts known to all: It was the leaders of the Van Buren party in Pittsburg who got up the public meeting which rec- ommended the banks, in 1837, to suspend specie payments and advised the city to issue shinplasters. It was the friends of Van Buren who issued the shin- plasters in Birmingham. The great body of the Whigs and anti-Masons of that place did all they could to oppose that measure. It was through the maneuvering of Van Buren officeholders that shinplasters were issued in the village of Law- renceville."
The newspapers of October 14, 1839, contained statements to the effect that the banks of Philadelphia had suspended specie payments on October 9th, and those of Baltimore on October 10th. It was announced also that the Attorney- General was instructed to prosecute any individual or corporation that should issue and circulate notes of less denomination than $5.
"Resolved, That a bank which refuses to redeem its notes deserves no indul-
- (w) Harris' Intelligencer, November 16, 1838.
(x) Pittsburg Market Reports, May to September, 1839.
(y) Gazette, September 11, 1839. (z) Gazette, September 19, 1839.
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gence from the people, and that every measure which the law will warrant should be taken to enforce the payment of its notes, or, failing this, the forfeiture of its charter" (a).
It was claimed by an anti-bank meeting, presided over by John B. Butler, and held October 18, 1839, that, under the law, all banks which had suspended had forfeited their charters, and that the Governor should direct the Attorney- General of the State to issue immediately writs of quo warranto against all such institutions. Among the leaders at this meeting were Dr. L. Callahan, John B. Butler, H. H. Van Amringe, James Hamill, Dr. Edward D. Gazzam, Patrick McKenna, John W. Burrell, John Byrne, Samuel Snowden, Orrin Newton, William Paul, J. H. Smith, William Ferrell, Robert Duffy, Joseph Major, William J. Scully, Robert Kennedy, Rody Patterson, Daniel Jamieson and others (b).
On October 13, or 14, 1839, the Exchange Bank, the Merchants' and Manu- facturers' Bank and the Branch Bank suspended specie payments, while the Bank of Pittsburg announced its intention of continuing to pay in coin (c). The suspension of part, and not all, of the banks occasioned a bitter warfare between the friends of the two measures. The Bank of Pittsburg, in order to sustain itself, curtailed its business (d), restricted its purchase of exchange and called in its loans as fast as prudence and the convenience of the community warranted. By taking this course it was subjected to much vilification and abuse, although it "displayed a spirit quite as liberal and accommodating as any of the other institutions" (e). The paper further said: "We will remark in reply to doubts expressed in other foreign papers as to the power of the bank to sustain herself in specie payments that two weeks and three days have elapsed since the other banks suspended, . and we venture to assert that the Pittsburg Bank will fulfill all her engagements according to the strictest requirements of justice." Late in 1839 the Bank of Pittsburg, having maintained specie payments contin- uously, declared without compunction a total dividend for six months of $35,- 681 (f).
"Bank of Pittsburg .- The Board of Directors of this institution met this morning and unanimously resolved to continue to pay specie as heretofore. We are informed that this bank has in its vaults more than sufficient specie to redeem every dollar of its paper in circulation" (g).
During the legislative session of 1839-40 it became clear that the destitute condition of the State Treasury demanded the passage of a law authorizing a State loan, which, it was evident, could be obtained from the banks only. The banks took advantage of this state of affairs to declare that, should the law requiring them to resume specie payments pass, they would refuse to take the State loan. The Pittsburg Mercury called this course on the part of the banks "bullying the legislature" (h).
Not the least of the evils in Pittsburg in 1839-40 was the buying and selling of gold and silver, the shaving of banknotes and the traffic in credit (i). The Secretary of the Treasury, having reported (j) to the United States Senate that the Bank of Pittsburg, after the resumption in 1838, had "suspended in part," the Pittsburg Board of Trade, by the secretary, J. King, in February, 1840, addressed a letter to the bank, asking if such had been the case; whereupon the latter, by its cashier, John Snyder, replied:
(a) Adopted by anti-bank partisan meeting held October 12, 1839; Callahan; Van Amringe and Hamilton, speakers.
(b) Gazette, October, 1839.
(c) Mercury, October, 1839.
(d) Baltimore Chronicle, October 26, 1839.
(e) Gazette, October 30, 1839.
(f) Communication of State Treasurer to Legislature, January, 1840.
i (g) Gazette, October, 1839. (h) Mercury, February 5, 1840.
(i) Pittsburger, February 18, 1840. (j) Gazette, February 29, 1840.
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"I will briefly state that the Bank of Pittsburg has never, in a single instance, to my knowledge, refused to pay its legal liabilities in coin, when demanded, since the general resumption in 1838, either for its notes when presented for payment, or its deposits, unless those specially made by the notes of the neighboring banks since their recent suspension."
"Has not the Secretary of the Treasury stated the truth when he reported the Bank of Pittsburg as suspended in part? . She pays specie on all her notes, but not on all her deposits. She pays out the notes of suspended banks in her current discounts and in payment of depositors, and even her last dividend was paid in current notes or the notes of suspended banks. . . It cannot be denied in strictness that the Bank of Pittsburg is in part suspended.
If partial suspension is so fatal to the credit of a bank that the Bank of Pittsburg must be vindicated from the charge, what will become of our other city banks whose soundness is above question? Surely a word might have been said in their favor, since we all know that, while they are reported wholly sus- pended, they rarely, if ever, refuse to pay five or ten dollars in coin when de- manded" (k).
"Upward of one thousand citizens of this country have memorialized the present Legislature for a repeal of all bank charters as being a violation of the United States Constitution" (1).
On the 6th of October, 1840, the Bank of Pittsburg announced its capital at $1, 188,290; its notes in circulation, $64,420; due depositors, $350,849.26; notes and bills discounted, $1,001,447.37; specie on hand, $205,151.41. The Exchange Bank, on the 8th of October, reported its capital at $895,980; its notes in circula- tion, $580.795; due depositors, $136,624.99; notes and bills discounted, $929,- 513.86; specie on hand, $98,907.69. The Merchants' and Manufacturers' Bank, on the 4th of October, reported its capital at $600,000; its notes in circulation, $331,857.50; due depositors, $197,145.82; notes and bills discounted, $537,162.85; specie on hand, $96,057.86.
The subject of banking was torn in tatters by the newspapers of Pittsburg during the early part of the year 1840. The Constitutionalist fiercely opposed all banks; the Mercury, Pittsburger and Manufacturer were somewhat milder in their denunciation; and the Gazette and Advocate sustained them in modified terms. While the compulsory resumption law was pending in the Legislature there was much excitement in Pittsburg, and bitter partisan discussions were of frequent occurrence. The resumption bill of 1840 required all banks to resume specie pay- ments January 15, 1841, and provided that banks which had suspended, or should suspend beforc that date, should loan to the State $3,100,000, and all that did not pay specie by that date should forfeit their charters.
"As to the banks in this city, the Pittsburg Bank did not suspend, and the other banks have, we belicve, for some time past, looked forward with satisfaction to the time when the resumption was to take place" (m). "The tightness of the money market, conscquent on rcsumption, has had a depressing effect on business, from which, however, it will no doubt soon recover" (n). . . . In this city thus far there has been no excitement on the subject (of resumption), and we believe no run upon the banks. Our local banks are undoubtedly in a sound con- dition, and enabled to meet any demands that may be made upon them. The banks of Ohio and Maryland have refused to resumc, and we presume that our citizens will be afflicted for some time to come with their worthless, irredeemable paper" (o).
On February 4, 1841, the banks of Philadelphia having again suspended,
(k) Advocate and Emporium, March 3, 1840.
(1) Pittsburg Constitutionalist, March 4, 1840.
(n) Daily Advocate, January 21, 1841.
(m) Gazette, January 15, 1841.
(o) Pittsburger, January 20, 1841.
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HISTORY OF PITTSBURG.
those in other cities followed with startling rapidity. Regarding Pittsburg, it was said: "In this city everything is quiet. Our banks continue to pay specie on all their liabilities, and there appears to be no disposition in the community to demand any more specie than is necessary for immediate business wants" (p).
.
"It will be seen that the banks in Philadelphia have all again suspended specie payments upon all bills over $5, the United States (Bank) taking the lead after having paid out the enormous sum of $6,000,000 in gold and silver or their equivalents. There seems to be existing against this bank a feeling of inveterate hostility which very few institutions could withstand. The banks in Pittsburg continue to pay specie, as usual" (q). . . . "We are glad to find that the course of the Philadelphia banks has had no effect whatever on our city banks; they still pay specie and will continue to pay specie for their liabilities. It is a gratifying evi- dence of the confidence reposed in these institutions that there has been no per- ceptible increase of demand for coin at their counters since the suspension at Philadelphia was ascertained" (r). "We are informed that in conse- quence of the late suspensions of the United States Bank and other banks in Philadelphia, the directors of the several banks in this city convened to consult as to the propriety of adopting a similar policy. We are told that the Merchants' and Manufacturers' Bank, without discussion or the least hesitation, resolved in substance that, as she had the ability and ample means, she would continue to redeem all her liabilities. This is the only course she could adopt to fulfill her trust and maintain the favor and confidence of the public. The Bank of Pitts- burg, we believe, never has and never will even consider and entertain the prop- osition to suspend. We have not heard the result as to the Exchange Bank, but trust she will adopt the same policy" (s). "We last week simply announced that the Exchange Bank of this city had commenced the issue of post-notes. Since then these notes have been put in circulation; or, at least, the directors have made the attempt to force them upon the people. The excite- ment which this act of the speculating directors of the Exchange Bank has caused in this community cannot well be told on paper" (t).
This newspaper further said the post-notes were made redeemable in one year after date, without interest, and had been offered in the city market on the previous Saturday, but had found no takers. This was a mistake, because many, then and afterward, were issued, and, although passing first at a slight discount, soon recovered and were as good as the most of paper currency. The Legisla- ture of 1840-41 had passed a Relief Law, which permitted banks to issue certain varieties of notes, and otherwise gave them special privileges to enable them to resume upon substantial and permanent grounds. Governor Porter, an anti-bank man, in his message of 1841, although he had previously opposed such a measure with much persistence, concluded that the issue of small notes to a limited amount, based on the security of State and stock credits, was less liable to objec- tion than at any former period.
"Our banks continue to pay specie, and there does not appear to be the least excitement in the public mind in regard to the subject. The whole com- munity seem disposed to sustain the banks in a legitimate course of action. The Bank of Pittsburg will be under no necessity of suspending in any event. The Exchange Bank has issued post-notes. Of the policy of this measure we are doubtful, but it will tend to relieve the community at the present time" (u). "Currency is evidently becoming scarcer and the rates of discount are most ruinous" (q). "Certificates of Deposit .- These are a new device of
(p) Gazette, February 10, 184I. (q) Gazette, February 8, 184I, ,
(r) Daily Advocate. February 10, 1841.
(s) Pittsburger, February 10, 184I.
(t) Pittsburger (anti-bank partisan), February 10, 184I.
(u) Daily Advocate, March 18, 1841.
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the financiers to regulate the currency so that payment in real money may be postponed or avoided. They were issued about a month since by two of ouf banks (the Exchange and the Merchants'). As long as the people will consent that real money shall be banished from circulation by the chicanery of bankers, they must submit to be thus plundered. We have no faith in any plan of relief which will not restore to us a currency of specie and paper (if we must have paper) for which coin can be had on demand" (v).
N. Holmes & Son, exchange brokers, March II, 1841, reported gold and silver at three to four per cent. premium, and the notes of the Bank of Pittsburg, Merchants' and Manufacturers' Bank and Exchange Bank at three per cent. premium, and United States Bank at twelve to fifteen per cent. discount. May 13, 1841, Sibbett & Jones, brokers, placed the notes of the Branch here at twenty per cent. discount, and of all the other Pittsburg banks at three per cent. premium. They placed certificates of deposit payable in bank funds at par and specie at three per cent. premium.
"It is understood that the two Pittsburg banks will avail themselves of the provision of the Relief Bill which permits the issue of small notes, and our merchants and manufacturers, the latter particularly, anticipate much benefit from it" (w). "The community is soon to be overspread with shinplasters. They will be issued under the Relief Bill. They are to be put out by our county commissioners and also by our city corporation" (x).
During the summer of 1841 Pittsburg, Allegheny and vicinity found them- selves in possession of a wonderful variety of money-American and foreign coin, regular issues of the banks here, special issues of certificates of deposit and post-notes, the "rag money" of other States, the scrip of the State, county, cities and the boroughs near here and United States Treasury notes. The great mass of paper formed the circulating medium. Gold and silver were at three per cent. premium; so were the notes of all the banks here. Notes of the Branch were at from seventeen to twenty per cent. discount. Certificates and post-notes circu- lated with the "rag money." and were, therefore, at par with the medium, though at a discount with coin. It was a remarkable period of heterogeneous bills and valuations. The manipulations of the brokers occasioned a constant seesaw or fluctuation of all money values; or perhaps, to do the brokers justice, it should be said that, as paper values were constantly changing, they merely rode up and down on the swells of the financial sea. In November, 1841, the newspapers of Philadelphia cautioned the public against the issues of the Exchange Bank of Pittsburg. In reply to these articles the Advocate said (y):
"There is no man in this community, of unprejudiced mind and of ordinary common sense, who doubts for a moment the solvency, yea, the entire ability of the Exchange Bank of this city to meet all demands against her promptly and in a satisfactory manner. At the time of resumption in January last she had a demand circulation from the mother bank of $295,000, which has been presented at her counter and redeemed and now reduced to $20,000. In February and March last, when the business community called loudly for a circulation of some sort, she conceived an issue of twelve-months' post-notes would be satisfac- tory. That issue was satisfactory to a great portion of our community, but prejudice and opposition from certain quarters was so strongly manifested that she stopped that issue, which had reached $70,000, and, although payable and redeemable at a distant period and in a particular mode, she comnienced calling in her post-notes, received them as cash at her counter, as she now does; and hier statement, which was exhibited at her election for directors on the 15th inst.,
(v) Mercury and Democrat, May 5. 1841. (w) Daily Advocate, May 13, 1841.,
(x) Mercury and Democrat, June 9, 1841.
(y) Advocate and Emporium, November 29, 1841.
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HISTORY OF PITTSBURG.
showed that circulation to be reduced to $25,000, and which is now daily coming in and is received on deposit and in payment."
It was further claimed for this bank that Philadelphia had first issued the special certificates of deposit and that the Exchange Bank, following that example, had issued such to the amount of about $90,000, when a law was passed prohibiting a further issue, and those in circulation were reduced to $50,000.
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