USA > Pennsylvania > Allegheny County > Pittsburgh > Standard history of Pittsburg, Pennsylvania > Part 51
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).
Part 1 | Part 2 | Part 3 | Part 4 | Part 5 | Part 6 | Part 7 | Part 8 | Part 9 | Part 10 | Part 11 | Part 12 | Part 13 | Part 14 | Part 15 | Part 16 | Part 17 | Part 18 | Part 19 | Part 20 | Part 21 | Part 22 | Part 23 | Part 24 | Part 25 | Part 26 | Part 27 | Part 28 | Part 29 | Part 30 | Part 31 | Part 32 | Part 33 | Part 34 | Part 35 | Part 36 | Part 37 | Part 38 | Part 39 | Part 40 | Part 41 | Part 42 | Part 43 | Part 44 | Part 45 | Part 46 | Part 47 | Part 48 | Part 49 | Part 50 | Part 51 | Part 52 | Part 53 | Part 54 | Part 55 | Part 56 | Part 57 | Part 58 | Part 59 | Part 60 | Part 61 | Part 62 | Part 63 | Part 64 | Part 65 | Part 66 | Part 67 | Part 68 | Part 69 | Part 70 | Part 71 | Part 72 | Part 73 | Part 74 | Part 75 | Part 76 | Part 77 | Part 78 | Part 79 | Part 80 | Part 81 | Part 82 | Part 83 | Part 84 | Part 85 | Part 86 | Part 87 | Part 88 | Part 89 | Part 90 | Part 91 | Part 92 | Part 93 | Part 94 | Part 95 | Part 96 | Part 97 | Part 98 | Part 99 | Part 100 | Part 101 | Part 102 | Part 103 | Part 104 | Part 105 | Part 106 | Part 107 | Part 108 | Part 109 | Part 110 | Part 111 | Part 112 | Part 113 | Part 114 | Part 115 | Part 116 | Part 117 | Part 118 | Part 119 | Part 120 | Part 121 | Part 122 | Part 123 | Part 124 | Part 125 | Part 126 | Part 127 | Part 128 | Part 129 | Part 130 | Part 131 | Part 132 | Part 133 | Part 134
On November 3, 1857, the banks held their annual meetings. All of the suspended banks accepted the provisions of the relief law. The Bank of Pitts- burg and the Exchange Bank cach declared a dividend for the last six months of three per cent. The new law prohibited the latter from declaring more. The stockholders of the Merchants' and Manufacturers' Bank appointed a committee to examine into its condition. It was the general belief, and it was afterward shown, that this bank was sound and in a short time would be as prosperous as ever. It was urged in November, 1857, that Pittsburg banks should have a clearing-house. Up to this date even Philadelphia had not established one. Money matters had not improved yet. Banks werc looking out for themselves, making themselves strong, discounting no new paper and rencwing only when obliged to do so. Stagnation had fallen upon all pursuits. On January 5, 1858, the Merchants' and Manufacturers' Bank announced that henceforward it would pay specie for all its liabilities. It was thus the first of the suspended banks to resume. About August, 1859, the notes of the Monongahela Vallcy Bank, of Mckeesport, were discredited by the banks and brokers here and thrown out of circulation. The cashier, J. L. Langley, declared this course unjust, and assured · the public that the bank was sound and had not closed its doors. Banks wcre very critical at this time, lending sparingly and cvidently guarding against possible disaster. It was afterward shown that, by means of forgeries, several men had defrauded the bank at McKecsport out of a large sum of money.
"The Exchange Bank resumed specic payments yesterday morning, although no notice had been given of the fact. This makes the resumption general, and we now present an unbroken linc of specie-paying banks. There was no run or pressure upon any of the resuming institutions, the resumption having been as quietly affected as if it were a matter of no general concern. This early resump- tion of our banks, in advance of all the banks of the State, and especially in advance of Philadelphia banks, is a feather in the cap of Pittsburg. It shows the general soundness of our business community and the thorough solvency of our banking institutions. Their weekly statements indicate a purcly healthy condition, and prove them to possess morc ready mcans, proportionately, than the banks of any other place. The Citizens' and Mechanics' banks resumed specie payments yesterday, according to notice, and the Exchange Bank without noticc. Money is abundant, but holders of it are extremely careful. The banks
(i) Investigating committee's report .- John Bissell, Thomas Bakewell, George Darsie, George W. Jackson and Daniel Agnew.
450
HISTORY OF PITTSBURG.
are not discounting up to their means, and their list of losses is steadily decreas- ing" (1).
The resumption here was followed by resumption in Philadelphia, Balti- more, Wilmington and other cities; the law did not require it in this State until April 12th. The banks were very cautious at this time, increasing their specie, withdrawing their circulation and decreasing the time and magnitude of their loans. It should be noted, therefore, that not a single banking institution here of any kind failed during the panic of 1857-8. Whether the banks which suspended were justified in that course may be considered, even in the light of the present day, an unsolved problem. However, the day will sometime be ushered in when, under wise financial laws, no man, at any time, with first- class security in his hand, will be refused money thereon, and no bank will be obliged to endure the spasms of a run, suspension, or a sacrifice of securities behind closed doors.
"The Union Banking Company are now fitting up an office, corner Fourth and Market streets, for the purpose of doing a general banking business. The board of directors consists of J. R. McCune (president), Joseph Kirkpatrick, John Wilson, John Glass, A. G. Cubbage, John Marshall and Joseph Horne. Robert S. Smith was elected cashier. 'The Union' now has a paid-up capital of $57,000, which is being constantly increased by weekly installments, and will at once assume a prominent position among the moneyed institutions of the city" (j). . "The Union Banking Company opened their office yesterday and start out under very favorable auspices" (k).
Among the private bankers of the decade of the '50s were the old and reliable house of N. Holmes & Sons, Patrick & Friend, O'Connor, Bro. & Co., Arthurs, Rodgers & Co., William A. Herron & Co., Semple & Jones, S. McClean & Co., Ira B. McVay & Co., and others, mentioned elsewhere. The Iron City Trust Com- pany, at 256 Liberty Street, did a general banking business of discount, exchange and deposit late in the '50s, with a capital of $150,000 and a possible capital strength of $1,000,000. In November, 1859, the president was G. E. Warner; cashier, R. C. Schmertz; directors, John Moorhead, Alexander Forsyth, John Heath, George S. Head, J. Hill, William Seibert, W. McClintock, Henry McCul- lough and Robert Anderson. From 1845 to 1858 was a banking period of extra- ordinary variety, daring and activity. Regardless of the law, more than one citi- zen was engaged in numerous banking enterprises at the same time. Bank char- ters were bought and sold, and men loaned their names and influence to secure new or extended banking privileges. The names of these institutions were often changed, and one bank was merged into another and that product into a third, or perhaps was subdivided, with bewildering frequency. In fact, it is difficult, if not impossible, to follow their swift movements upon the chessboard of that restless financial period. Local bank stocks during the winter of 1859-60 approximated the following value:
Par.
Sold for.
Bank of Pittsburg
$50
$63.50
Exchange Bank.
50
62.00
Merchants' and Manufacturers' Bank.
50
56.25
Citizens' Bank
50
55.25
Mechanics' Bank.
50
57.00
Iron City Bank.
50
57.00
Allegheny Bank.
50
57.00
During the summer and early fall of 1860 nothing eventful happened to
(1) Daily Journal, January 10, 1858.
(j) Gazette, August 9, 1859 (k) Post, September 2, 1859.
451
HISTORY OF PITTSBURG.
the banks of this vicinity. They were cautious, though they continued to lend quite freely on first-class paper. The banking law of 1850 provided that the capital stock of any bank organized thereunder should not be subject to tax- ation for other than State purposes; but the city of Pittsburg, in 1859, by authority of an act of the Legislature passed January 5, 1859, was authorized to levy and collect an annual business tax not exceeding one-third of a mill per dollar on the average quarterly business of banks, banking institutions, brokers, etc. The Iron City Bank resisted the collection of the latter tax, but was defeated in the lower court; and in the Supreme Court, in January, 1861, the court, Judge Woodward delivering the opinion, declared that the law was constitutional. It was a test case on the ground of constitutionality. The city tax on the seven banks was as follows, that for 1859 having a penalty of ten per cent. added, and that of 1860 five per cent .:
Institutions.
1859.
I860.
Bank of Pittsburg
$635.80
$615.16
Exchange Bank.
559.52
501.90
Merchants' and Manufacturers' Bank
350.03
321.48
Citizens' Bank.
223.69
243.27
Iron City Bank.
243.72
239.30
Mechanics' Bank
264.04
282.58
Allegheny Bank
253.08
275.07
Totals.
$2,529.88
$2,478.76
A general law for the establishment and maintenance of a free banking system in the State was passed by the Legislature March 31, 1860. The friends of the measure who had so long fought for its success were at last triumphant. The law provided, among other things, that any partnership or association of persons, not less than five, might establish banks of discount, deposit and circu- lation; that the capital of any bank should not be less than $50,000 nor more than $1,000,000; that the chartcred life of each institution should be twenty years, and that each might issue its own notes in denominations not exceeding five dollars. On May 29, 1860, there were offered at public auction, by Austin Loomis & Co., 1,200 renewed shares of stock of the Citizens' Bank, in lots not exceeding forty shares each, pursuant to the law of May 14, 1857. This stock sold for from $55 to $55.50 per share.
The German Trust and Savings Bank opened for business November 12, 1860, with Augustus Hoeveler president, John Stewart cashier, Springer Har- baugh, Adam Reineman, A. Frowenfeld, Christian Seibert, J. F. Havekotte, Anthony Meyer, E. H. Meyers, Joseph Lang and Augutus Hoeveler, directors, and announced a capital of $100,000.
Late in November, 1860, the banks of the country, from a state of lethargy, began to manifest strong panicky tendencies, owing mainly to the rumors of secession. On November 21st a meeting of the bank presidents of Baltimore resolved to suspend spccie payments the next day-the 22d. Banks at Rich- inond also suspended. On November 21st the currency panic in New York was said to have equaled that of 1857. All banknotes of institutions south of Wash- ington were discounted there at from twenty to twenty-five per cent., and those of Illinois and Wisconsin at fifteen per cent. The Philadelphia banks suspended on the 22d of November at I o'clock p. m. The New York banks, at a public meeting held to determine what should be done, resolved not to suspend. Banks at Trenton, New Jersey, suspended on the 23d.
"Suspension .- Our banks, excepting the Bank of Pittsburg, following the
452
HISTORY OF PITTSBURG.
example of Philadelphia, have suspended. We think this course ill-advised" (n). . "IT'hercas, We have heard that the other banks of Pittsburg have suspended specie payments; be it Resolved, That this bank will pay specie on all its liabilities as heretofore" (o). . "The banks have suspended full of coin without a run on them from any quarter and at a time when the country was entering upon one of the most prosperous years it has ever seen. Our banks in Pittsburg had no alternative but to suspend when the Philadelphia banks suspended" (p).
The newspapers here, of one accord, declared that the banks, as well as business men, were in a sound and prosperous condition, and, that so far as Pittsburg was concerned, the suspension was wholly unnecessary. But deeper forces were at work, and the far-sighted financiers of the Atlantic cities had snuffed the coming distress. Banks in New England and in the West continued to fail. Still, financiers here and business men generally could see no cause for it, and, aside from uneasiness and caution, paid little attention to the pre- vailing agitation. In reality it was not a business panic, nor a bank panic, but a political manifestation of distrust in the stability of the Government, which affected all industries alike, and soon restricted operations over the country generally, as well as in this vicinity. On January 10, 1861, exchange on New York sold here at two and a half to three per cent. premium.
"The money market presents a more encouraging aspect, both here and elsewhere, and the prevailing opinion now is that the effects of the panic, although bad enough, will not prove so disastrous as was generally expected, and that confidence will be entirely restored" (q). "Currency remains as before, with an unprecedented demand for an extraordinary scarcity of small 110tes" (r). "The money market presents no new feature, but the indications now are that our banks will resume specie payments at an early day. The banks' statements for the past week show a slight decrease in loans and an increase in specie, circulation and deposits" (s).
By act of April 17, 1861, the law requiring banks to pay specie or forfeit their charters was suspended until the second Tuesday in October, 1861. Notes of solvent banks were to be received at par upon certain conditions; and all incorporated banks of issue were authorized to put in circulation notes of the denomination of one, two and three dollars, to an amount not exceeding twenty per cent. of their capital stock paid in. The life of this law was continued from time to time during the war and after its termination. By act of May, 1861, every stock broker, exchange broker, real estate broker and private banker was required, on or before the first Monday of December, 1861, to make a written return under oath to the Auditor-General, setting forth the full amount of his receipts from commissions, discounts, abatements, allowances and all other profits arising from his business, and to pay into the State Treasury three per cent. of the aggregate amount contained in such return for the use of the Com- monwealth.
"The present suspension differs from all other previous ones in this, that it occasions much less difficulty to the public than was ever before experienced. The trouble and expense of procuring exchange is gradually fading away, and the banks dispense coin enough to remove all difficulty in the way of making small change. If the Legislature would but pass a law authorizing the banks to receive currency in payment of debts at a limited rate of discount, but
(n) Gazette, November 24, 1860. (o) Minutes Bank of Pittsburg.
(p) Gazette, November 28, 1860. (q) Market Review, December 7, 1860.
(r) Market Review, December 28, 1860. The writer meant that there was an unpre- cedented demand for notes and not for scarcity.
(s) Market Review, January 4, 1861.
453
HISTORY OF PITTSBURG.
not to pay it out, all remaining difficulty would be obviated. The rate of dis- count should be just enough to pay the expense of sending the currency home for redemption in coin or exchange, and the community would be thus relieved in the means of payment and obtain in the end an improved currency" (t).
But the editor confessed that he was not on the popular side of the question. He had opposed the suspension from the start as unnecessary. As a matter of fact, the suspension saved business men from a severe panic and from immense losses and many failures.
"Our banks have not as yet resumed specie payments, nor are we able to state when they will. The late movement of some of our business men in endeav- oring to drive out Western currency by refusing to take it without being allowed the usual discount, four per cent., has not as yet had the desired effect. A large portion of the mercantile community still receive and pay it out as cur- rency" (u).
On April 8, 1861, a meeting of merchants and business men was held at Concert Hall to consider informally the subject of currency reform. Captain David Campbell presided. Several speeches were delivered on that subject, suc- ceeding which a motion was introduced that all Missouri and Virginia notes should be refused after May Ist. Objections were presented and further action was deferred until the following Monday, on which occasion it was resolved that some concerted action should be taken to rid the community of the depre- · ciated bills, which then constituted the great bulk of the local currency (v).
"The money market remains without any essential change, except that it is a little more buoyant. One of our suspended banks-the Mechanics'-has resumed specie payments, and it is confidently expected that the others will soon follow" (w).
"Pittsburg, April 16, 1861.
"Hon. J. P. Denny, Harrisburg, Pennsylvania:
"Sir :- Please inform the Governor at once that the banks of Pittsburg will cheerfully respond to the call for money to meet the late appropriation, to be used in enabling the Government to sustain the constitution and the laws. By order of the board of bank presidents. J. B. Murray, president"' (x).
Immediately after the firing on Fort Sumter the notes of Virginia, North Carolina, South Carolina, Georgia, Alabama and Missouri could not at first be sold here at any price, though bankers continued to receive them on special deposit. Exchange on New York and Philadelphia rose to two and one-half per cent. premium over bankable funds, with coin at one and one-half per cent. premium over the same. "The confusion in money matters continues. The secession news from Virginia is likely to damage her credit. Her paper, which a few days since passed here as currency, was almost entirely refused to-day. Missouri, too, was looked at with great suspicion, and is not likely to fare much better than Virginia" (y).
Late in April the banks were very critical, scrutinizing all paper for dis- count and notes for deposit with extreme care. Business men were equally suspicious of the notes of all banks. By April 24th exchange on New York and Philadelphia had risen to five per cent. premium over bankable funds, and coin to the same figure. There never had been a period in the history of this vicinity when money values fluctuated so violently or were in a deeper state of chaos. Southern currency was almost wholly refused. Baltimore notes were quoted at five per cent. discount. The unsettled value of currency almost totally suspended business operations until the drift of financial events could be forecast
(t) Gazette, January 16, 1861.
(v) Post, April 9. 1861.
(x) Telegram to Mr. Denny, Harrisburg.
(1) Market Review, March, 1861.
(w) Market Review, April 11, 1861.
(y) Gazette, April 16, 1861.
454
HISTORY OF PITTSBURG.
with some degree of certainty. Early in May there was a noticeable recovery. Exchange on New York and Philadelphia stood at four per cent. premium, on Baltimore one per cent. premium, with coin at four per cent, premium over bankable funds. "Small Bills .- The ones, twos and threes, authorized to be issued by the banks of Pittsburg, arc now nearly ready for paying out in several of the banks. The Mechanics' Bank has already issued some of these bills, which arc exceedingly well executed. They will be a great relief to the com- munity, as it is now very difficult to obtain enough small change to transact business" (z).
During the summer months of 1861 the local banks mentioned remained in a state of suspension. On August 7th exchange on New York and Philadelphia stood at two per cent. premium; September 12th at one and three-fourths per cent. premium; October 3d at one per cent. premium, and October Ioth at one- fourth of one per cent. premium. This reduction was due to the resumption of specie payments by all the other banks of Pittsburg and Allegheny early in October, and to their steady action in that direction for one or two months previous to such resumption. "The banks of Pittsburg having resumed specie payments, their bills are bought in this city at one-half per cent. discount" (a).
On the morning of December 31, 1861, came over the wire the news that the banks of New York, Boston, Albany, Cleveland, Philadelphia and other cities. had again suspended specie payments. This intelligence was sudden and almost wholly unexpected. It had been hoped here with much confidence that the resumption in October would settle the money market for the winter. As it was, bankers and business men again saw that they must loyally and grimly face the dismal and doubtful situation. Accordingly, a meeting was called by the banks, and all resolved to suspend, except the Bank of Pittsburg, the Mechanics' Bank and the Iron City Bank, which three determined not to suspend but to continue paying specie as before.
"December 30, 1861, the cashicr stated that the banks in the East, and a number of banks in this city, had suspended specie payments, and recommended that a resolution be entered on the minutes to mark the policy of this bank; whereupon, on motion of Mr. Bakewell, it was Resolved, That an entry be made that this bank, as heretofore, will meet all its liabilities in specie, regardless of the action of other institutions" (b). "The suspension of some of the banks in this city caused scarcely a ripple on the surface of affairs" (c). The latter was a remarkable statement to make, and yet it was literally true. No monetary excitement nor alarm was caused by the suspension. Business men as well. as banks bravely accepted the situation without flinching, and as if its coming was a familiar circumstance. Coin immediately rose to one and one-half per cent. premium over bankable funds, and exchange on New York and Phila- delphia to one-half of one per cent. premium. The only par paper here on January 1, 1862, was that of the banks of New York, Philadelphia and Pittsburg. A noticeable fact in connection with the old banks of this city is that at no time did the people for a moment lose confidence in their entire solvency. They could suspend at will, but their paper passed readily as the choicest of par funds. In fact, some of it, as will be learned hereafter, rose to a premium over par funds, and promised to keep pace with gold, and did so, in its flight upward. Of course the suspension alone was sufficient to cause coin to rise to a premium. Before January 15, 1862, coin had risen to three per cent. premium over bankable funds, and by January 30th to three and one-half per cent. The paper issues of the soundest banks were quoted at par, papcr of the poorer banks at varying rates
(z) Gazette, May 14. 1861.
(b) Minutes of the Bank of Pittsburg.
(a) Philadelphia Ledger, October 12, 1861.
(c) Gazette, January 1, 1862.
H. C. FRICK.
457
HISTORY OF PITTSBURG.
of discount, while gold and silver were at three and one-half per cent. premium compared with the best bank issues, except of specie paying banks. The dollar of 25.8 grains of alloyed gold was the true par, while the paper upon which nearly all financial estimates had been made for many years was false, "and like a false balance is an abomination to the Lord" (d).
Previous to December, 1861, the banks of the North had loyally sustained the financial measures of the Government. They had taken the bonds in large quantities, but the $250,000,000 loan had proved too much for them. "Before the banks had paid much of the last loan they broke down under it and suspended specie payments" (e). Thus there was nothing in their own conduct to compel their suspension; they had been forced to that expedient in their efforts to assist the Government. The passage of the Treasury Note Bill by Congress early in 1862 was such a new departure, was so unprecedented-paper money not redeemable on demand, but made a legal tender-that local bankers regarded it with surprise, doubt, and, in some instances, consternation.
It became necessary for the Legislature, early in 1862, owing to the penalties placed upon all banks which should suspend specie payments, to continue the act for their relief, passed in April, 1861. Accordingly, a law placing notes of all solvent banks, even though suspended, the notes of free banks, the demand legal tender notes of the Government, on the same footing as the notes of specie- paying banks, and exempting banks from any penalties for having suspended, was passed by the Legislature in that month. Much surprise was manifested here at the latitude of the law, and not a few deprecated its enactment. They could not so soon forget the settled policy of the State, but accepted this procedure as a "war measure." In 1863 the suspension of specie payments by legislative sanction was extended to all banks of the State organized under the free bank- ing laws.
During the latter part of October, all of November and nearly all of Decem- ber, 1861, financial affairs were easy and strong. The value of coin varied from one-fourth of one per cent. to one per cent. premium, while exchange on New York and Philadelphia presented about the same showing. Bankable funds were used as the par or standard of valuation, and consisted of first-class bank issues. The notes of all the local banks stood at par-stood at the head of all bank- able funds, owing to the confidence of the citizens in the unquestioned solvency of the city banks. In .September, 1861, Joshua Hanna, of the banking house of Hanna, Hart & Co., was appointed by the Secretary of the Treasury agent for the national loan of $250,000,000; these were the famous 7-30 bonds. In two days, September 16th and 17th, he received an aggregate subscription to this loan of $260,000, of which the Exchange Bank took $100,000, the Citizens' Bank $60,000 and the Merchants' and Manufacturers' Bank $50,000. At the end of the first week the subscription amounted to $290,000. Up to October 5th the amount subscribed had reached $392,350. The loan was taken slowly after the first few days, and strong appeals were made by the newspapers that more wealthy people, instead of people in moderate circumstances, should thus "sustain the Government." The Gazette said: "It is with regret we record the fact that, so far, the Bank of Pittsburg, one of the strongest institutions west of the moun- tains, has contributed nothing. . We believe the banks are now paying coin, which will enable many to take stock, who, but for the difficulty of procuring coin, would have done so before now. No fear need be entertained of leaving the bonds destitute of a specie basis, for the coin will only flow out to do its good work, and then flow back again" (f).
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.