Standard history of Pittsburg, Pennsylvania, Part 52

Author: Wilson, Erasmus, 1842-1922; Goodspeed, Weston Arthur, 1852-1926. cn
Publication date: 1898
Publisher: Chicago : H.R. Cornell & Co.
Number of Pages: 1192

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(d) John Harper in Gazette, February 3, 1862.

(e) Mr. Stevens in Congress, February, 1862.

(f) Gazette, October 7, 1861.

24.

458

HISTORY OF PITTSBURG.

On February 20, 1862, coin was quoted here at four per cent. premium over bankable funds; March 6th, at three per cent .; April 10th, at two and one-half per cent .; April 16th, at two per cent .; May 15th, at three and one-half per cent .; June 18th, at six to six and one-half per cent .; July 9th, at nine to ten per cent. No doubt the reverses to the Army of the Potomac caused the rise in gold, or rather the depreciation in paper, in June and July. In July small change was very scarce, and could only be obtained at eight per cent. premium. The rise in gold was a source of wonderment to many thinking men, and was regarded with dismal forebodings. In 1861 and 1862 there was a considerable following here which contended that all banks should be compelled to resume and maintain specie payments-should be forced to sustain their paper issues at par in Philadelphia, and should be rigidly prohibited from issuing small notes. The leading organ of these people was the Evening Chronicle. As a matter of fact, the Treasury notes and Government bonds had been taken up, money was abundant, and, under the masterly guidance of Secretary Chase, finances were easy and business enterprises prosperous.

"It is strange that any complaint should be made here about our currency. It has never been so uniform or so good, and exchanges have never been so favor- able. The brokers are suffering for want of business. Not long ago our local currency included a large amount of Western depreciated banknotes, and many manufacturers paid their hands in notes depreciated five and six per cent. At present our circulating medium is almost entirely composed of city banknotes, or others equivalent. The depreciation on the notes of the country banks is very trifling and of no consequence. An actual resumption of specie payments is impracticable, while the United States notes are a legal tender and not redeemed in coin" (g).

In 1862 the Legislature incorporated the "Dime Savings Institution of Pittsburg." The act provided that the business of the institution should be to receive deposits of any amount not less than ten cents, and to invest the same in certain stocks and bonds, in mortgages, in promissory notes, etc. (h). This institution opened for business May 21, 1862, at 110 Smithfield Street, with James Park, Jr., president, and D. E. Mckinley secretary and treasurer.

On July 13, 1862, a movement was started among the butchers of Pittsburg and Allegheny to relieve the pressing need of small change by an issue of $1,000 in twenty-five cent notes. It was proposed that this issue should be redeemed by the "Association of Butchers," which was abundantly responsible for that amount. The action was deprecated by the newspapers. However, a general meeting of the citizens was called, to be held Monday July 14, at 10 o'clock, at the Merchants' Exchange, to consider the matter. James Robb called the assemblage to order and Isaac Jones was chosen chairman. D. O'Neill, H. H. Smith and William Anderson were appointed secretaries. George H. Thurston read the call for the meeting that had appeared in the morning newspapers, in which it was stated that the citizens were called together "for the purpose of taking into consideration the threatened inundation of shinplasters upon this community by unlawful associations of men." Dr. E. D. Gazzam offered the fol- lowing: "Resolved, That the true policy of the people is, that specie should be received at its market value and paper money at its market value in all business transactions, and, as silver money is now worth ten per cent. more than paper money, five-cent pieces should pass for six cents, dimes for eleven cents, quar- ters for thirty cents and half-dollars for fifty-five cents" (i). The motion to adopt this resolution at once stirred up a tempest. Various views were expressed

(g) Cor. Gazette. March 27, 1862.

(i) City papers, July, 1862.

(h) Act of April 11, 1862.

+59

HISTORY OF PITTSBURG.

in emphatic language. Some favored the resolution; some opposed it. Others advocated the issuance of local shinplasters, and still others denounced such a course as contrary to the law of 1817 and of 1849. It appeared in the discussion that, while butchers and others were accustomed to shave paper from ten to fifteen per cent., they would not reverse the rule and permit others to shave them to that extent. Finally, John S. Cosgrave moved to strike out of the above resolution all after the word "resolved," and insert a declaration offered by himself. Through a misunderstanding great confusion resulted. At last, order having been restored, the following resolution was adopted: "Resolved, That this meeting, representing the wishes of the mercantile and manufacturing inter- ests of Pittsburg, declare it impolitic and inexpedient to countenance the issue or circulation of any description of paper in the semblance of money in any amounts less than one dollar, or by any other than legally constituted corpora- tions." Regardless of the proceedings of this meeting, the butchers of Allegheny immediately thereafter issued a considerable quantity of "shinplasters," which began to circulate freely. The form was as follows:

"The Butchers of Allegheny City, July 14, 1862, pay to the bearer twenty- five cents in merchandise and change.

"No. 560.

R. DANVER."

The newspapers generally denounced this act and insisted that the law against such issues should be enforced. Many of the business men refused to receive them. But it was urged that, though such issues were unlawful, the act was no worse than the suspension of specie payments by the banks, which was likewise unlawful; and that the cities could issue them and then throw themselves upon the mercy of the Legislature, just as the banks had done in suspending. All agreed that fractional currency of some sort was an absolute necessity. Suit was instituted against R. Danver, having in view the prevention of these issues, but, on July 23d, before the case could be heard, it was announced that, inasmuch as Congress was on the point of issuing a national fractional currency, the Butchers' Association would recall their issues of "shinplasters," providing the suit against Mr. Danvers was dismissed, which was accordingly done (j).

Late in July, 1862, the notes of the banks in Pittsburg which had suspended specie payments were quoted at par, while those of the three banks which had not suspended-Bank of Pittsburg, Iron City Bank and Mechanics' Bank- were quoted at ten per cent. premium. Par was still estimated from the market value of the notes of solvent banks which had suspended. The notes of banks in New York City, Philadelphia, the suspended banks of Pittsburg, Delaware, Baltimore and the Ohio and Indiana State banks were at par; Canadian paper stood at five per cent. premium; the notes of several banks in this State which had not suspended were at five per cent. premium; New England and New York State, one-half of one per cent. premium; Iowa and Michigan, one per cent. premium; Illinois and Wisconsin, from three to sixty per cent. discount; nearly all the Southern States, fifty per cent. discount; gold, fifteen to sixteen per cent. premium; silver, ten to twelve per cent. premium (k).

The first "Government stamps" (as the fractional currency was at first called), which had been made a legal tender, were eagerly received and circulated about the middle of August, 1862, so great was the demand for small change. Early in October, 1862, gold was quoted here at from 120 to 122 per cent. premium, silver at about 115, notes of the Bank of Pittsburg about 116 (they were thus at a premium with silver), while notes of the other local banks were classed with par funds, and were thus at a premium with currency. Late in October,

(j) Post, July, 1862.

(k) Dispatch, July, 1862.

460

HISTORY OF PITTSBURG.

when gold stood at 128 and silver at 120, notes of the Bank of Pittsburg were quoted at 122 to 124. December roth gold stood at 129, Bank of Pittsburg notes 129, silver 122. This bank from this time onward maintained its notes at par with gold.

During the autumn of 1862 great inconvenience was occasioned here by the dearth of small change. On November 7, 1862, Captain C. W. Batchelor, who had been appointed Government depository or fiscal agent for its distribu- tion, received $50,000 in "postage currency," and in a few hours, so great was the demand for it from tradesmen and merchants, circulated the whole amount with- out half satisfying the demand. On December 15th Mr. Batchelor announced that $30,000 more would be distributed in sums of $15 to each individual. Hours before his doors were to be opened the Custom-house was besieged by an immense crowd, which jostled and fought one another for places near the door. So large was the crowd and so great the struggle for place, it became necessary to suspend operations and clear the yard with soldiers and bayonets. Citizens were required to stand in line and take their turn. Several secured double or triple supplies by placing two or more representatives in the line. At this time fractional currency evidently was at a premium in this vicinity.

State banks were required by law to exchange with the State Treasurer coin for currency to a sufficient amount to pay the interest on the State debt, and were given specie certificates of exchange, not transferable, pledging the faith of the State to reexchange the coin for current notes on or before the first Monday in March, 1864. It was also enacted that the Attorney-General should proceed to wind up the affairs of any bank which refused or neglected to comply with these provisions; that no bank should sell gold or silver from its vaults while in a state of suspension; that all banks should reduce their circulation to an amount not exceeding twice their capital stock or three times the amount of coin on hand, and that these provisions should not apply to banks which had not sus- pended, nor did not suspend prior to the first Monday in March, 1864, nor to any bank incorporated under the free banking laws (1). The following amounts were required from local banks to pay interest on the State debt: Exchange Bank, $36,300; Iron City, $16,000; Merchants' and Manufacturers', $48,000; Allegheny. $40,000; Citizens' $20,000; Mechanics' $20,000. The Bank of Pitts- burg, not having suspended, was exempt under the law from this loan (m). It was declared unlawful for any saving fund society, or company, or officer or agent thereof, to receive on deposit any sum of money when such society, or company, had not assets sufficient, at their cash value, to pay all its debts and liabilities (n).

During January, 1863, gold continued to rise. By the middle of February it had risen to about 153; silver stood at 140, and United States demand notes at 140. "The market is very excited and unsettled and rates are expected to decline soon (o). But the newspaper was a false prophet, because a week later gold reached about 172 in New York and was quoted here at 165. "The market is very excited and prices are advancing" (p). The National bank bill was pending in Congress and seemed likely to pass. The prospect of large issues of paper by the Government, and their predicted conflict with State bank issues, caused old financiers here to shake their heads ominously. The proposed plan of taxing State bank issues out of existence and of circulating and maintaining a uniform national currency was discussed with much feeling and gravity. The great military loan of the State in June and July, 1863, amounting to $675,195.33.

(1) Act of January 30, 1863. (m) Chronicle, March 10, 1863.

(n) Act of April 22, 1863.

(o) Chronicle, February 18, 1863.

(p) Chronicle, February 26, 1863.

461

HISTORY OF PITTSBURG.

was advanced by the banks and was ordered repaid in 1864 (q). The bankers and brokers of Pittsburg and Allegheny were not backward in taking every advantage to make money out of the rise in gold and silver. All talked of the fluctuations of coin and not of those of paper money. They did not seem to realize that the value of coin compared with commodities had undergone very little change, and that paper was the article which fluctuated and thus unsettled estimates of worth. Paper was yet considered the basis, just as par funds had been from time immemorial. During the entire war the selling price of coin here varied from two to ten per cent. less than in New York. The eyes of Pittsburg were fastened upon the stupendous operations of the gold gamblers of the metropolis, and all operations here were governed by Eastern quotations. Here, as elsewhere, some were fortunate in guessing the changes of the gold market; others lost heavily. Many speculated, but usually with prudence and caution.

"Gold is tumbling down even faster than it went up. Yesterday it sold at 145.5 in New York and 140 in Cincinnati. Our brokers here were afraid almost to touch it at any price, but we heard of a few sales at 139 and 140. There was quite a panic among those who had been holding back for a rise, and a large amount was sent to New York for delivery to-day at Eastern rates. Exchange, notwithstanding the fall in gold, continues inordinately high; the pound sterling selling here at $8 yesterday" (r). "Postal currency of the smaller denominations can now be had in any amount at the Custom-house by applying to Captain Batchelor" (s). "The advance of the rebels had developed one fact which has been a mystery to the people for some time, viz .: What has become of the gold coin? Fearing an attack, the bankers and others of Pitts- burg and elsewhere thought it prudent to remove their coin, and the American Express Company delivered in Cleveland, on the 15th inst., $15,000,000 in gold, and on the succeeding day $7,000,000 more, of which $650,000 was also in gold" (t).

In the autumn of 1863 "money was very plenty and easy to get." Stock of the old banks rose higher than ever before, Exchange Bank shares reaching $71.50 and Bank of Pittsburg $68.50. Fractional currency was abundant and of the greatest convenience. The Exchange and Iron City banks declared a five per cent. dividend; the most of the others four per cent. All the banks discounted heavily. Later a stringency was felt, owing to the deep investments in Govern- ment bonds and bank stocks. Joshua Hanna was appointed Government agent to receive subscriptions to the 5-20 loan. In October, 1863, when gold was worth 147, notes of the Bank of Pittsburg were quoted at the same rate. At this time silver was worth 137 in this city. The Bank of Beaver was the only other institu- tion in the State whose notes were quoted at par with gold (u).

"The fact is, money has become so plenty that every class of investment is stimulated in price. Local stocks, under this plethora of money, are much inquired for, and, with some exceptions, are firm at advanced rates" (v).

"Under this abundance of money every description of securities is looking up, and, in the absence of first-class investments, may find willing purchasers. We are therefore not surprised at some of our local stocks so long dormant being put into the market" (w).

The Real Estate Savings Institution, with office at 63 Fourth Street, received deposits daily and Saturday evenings, paying therefor six per cent. interest. The German Trust and Savings Bank, at Sixth and Wood streets, did a general

(q) Act of August 24, 1864.

(s) Evening Chronicle, April 22, 1863.

(u) Dispatch, October 22, 1863.

(w) Commercial, February 19, 1864.

(r) Evening Chronicle, March 25, 1863.

(t) New York Tribune, June 20, 1863.

(v) Commercial, February 15, 1864.

462

HISTORY OF PITTSBURG.

banking business and paid interest also on deposits. The old, tried and reliable house of N. Holmes & Sons likewise conducted a flourishing business at 57 Market Street. The supply of money continued on the increase. It poured into the city from the country districts for investment, and, not finding employ- ment at active business, sought all varieties of stocks. Banks, brokers and capitalists of all sorts diligently hunted profitable fields for investment. In con- sequence, stocks shot upward and business of all kinds received a wonderful stimulus. The genius of Chase had revolutionized financial affairs throughout the country and placed the credit of the nation on a foundation the strength and solidity of which astonished the financiers of Europe and encouraged the friends of the Union as nothing else could, except great victories on the field of battle. Dormant stock of old and, no doubt, questionable character and value, was brought out and heralded with all the power and virtue of printers' ink. Money was actually largely seeking investment at from four and one-half to five per cent interest. A slight check was given to confidence by the report that the Secretary of the Treasury intended to unload a large quantity of gold on the market, and as a consequence that article declined considerably here, Interest- bearing stocks were examined and criticised by investors. Fancy stocks, with large and certain dividends, were pursued with intense persistence by money- holders. It became apparent in Pittsburg, and was seriously discussed in the newspapers, that the old State banks could not live in company with their popular and wonderfully successful rivals, the National banks. But what was to become of the State banks and their issues? was the absorbing question. "Although there is no combination of individuals in this community that could be called 'stock jobbers'-no 'bulls' nor 'bears'-to raise prices or depress them, still we have a goodly number of wide-awake capitalists ready for fat operations. But there is no bold dash about them; they are severely cautious, and low rates for money afflict them" (x).

It was at first thought with pain that the law of "survival of the fittest" would determine the fate of the two systems of banking-the old State and the new National. Later, divers views were entertained amid the inevitable con- fusion. Overy all this financial doubt hung the dark cloud of war, with its unrest, its rupture of old traditions and customs, the uncertainty of the out- come and the fictitious valuations caused by the depreciation of paper. "Were it not for the Government securities, money would be a drug, and there would be an unprecedented inflation in all values far beyond their intrinsic worth" (y). "At no time within the history of our country has there ever been an approximation to the present condition of its monetary affairs. Every appli- ance that art and mechanical skill can devise is tasked to its utmost capacity in the manufacture of paper money" (z).

In March, 1864, the price of commodities and stocks advanced to a surprising and unexpected height. "With the example of so sudden a rise, no wonder that the holders of many of our weak and broken railroad shares are bringing them out and dusting them off, and giving them some value to start them up which inay 'lead on to fortune' their unlucky owners" (a). The old idea of the masses that gold fluctuated began now to be replaced with the knowledge that paper issues, which constituted the circulating medium, governed the rise and fall in the price of all commodities, including gold. The newspapers began to estimate gold as the standard or par valuation instead of par paper. Strong successes to the Federal arms were sooner or later followed by a fall in the price of gold, or, strictly speaking, in the rise in price of the paper issues of the Govern- ment. And the reverse was true. Old financiers here looked with fearful mis-

(x) Commercial, February 27, 1864.

(z) Commercial, March 2, 1864.

(y) Commercial, February 29, 1864.

(a) Commercial, March 16, 1864.

463

HISTORY OF PITTSBURG.

givings upon the vast issues of paper money, the rapid rise of gold toward the 200 figure, and thought of the crash that would ensue when the rebellion had been subdued and the return to specie basis had been declared. Brokers were in ecstasies and flooded the market with their temptations.

"The difference between currency and what used to be called par funds is nominally three-eighths of one per cent. discount, and this fraction will decrease as currency itself (which is not now so plentiful) becomes scarcer. Gold-buying rates yesterday at the counters of our banks was 165.5, and silver 160" (b). "Of one thing at least we are certain: we are going up. The process is so easy and so joyous we have little time to contemplate the time or the process of the coming down, or why we have gone up so rapidly" (c).

The financial policies of the seven old banks differed materially. The Bank of Pittsburg steadily retired its circulation from $194,966 in April, 1861, to $28,596 in May, 1864. The Exchange Bank increased its circulation during the same time from $1,032,850 to $1,930,000; the Merchants' and Manufacturers' increased from $550,805 to $1,160,565; Citizens', from $410,500 to $928,879; Mechanics', from $249,380 to $965,683; Iron City, from $256,325 to $770,835; Allegheny, from $425,430 to $947,144. Thus all increased their circulation except the Bank of Pittsburg. The amount of coin in all the banks had decreased except in the Merchants' and Manufacturers' Bank. The decrease of coin in the Bank of Pittsburg, owing to the continued redemption of its notes, was greatest-over one hundred per cent. The Exchange, Citizens' and Allegheny Banks had increased their loans; all the others had decreased them. The Bank of Pittsburg showed an immense increase in deposits-from $651,203 in 1861 to $1,606,422 in 1864, hold- ing at the latter date nearly twice the deposits of any other bank. In May, 1864, the Bank of Pittsburg held almost as large an amount of Treasury and bank notes as the other six banks combined; but it had purchased less bonds of the State and Government than either of the others, except the Allegheny Bank. The Exchange Bank headed the list with $1,367,000 in Government bonds, though the Merchants' and Manufacturers' Bank stood a close second with $1,342,970.

In April, 1864, a fearful panic in stocks occurred in New York, and, of course, extended to Pittsburg. Values went down from ten to thirty per cent. Greenbacks were regarded so highly that they were worth during the panic more than certified checks. Lumber dealers and oil producers here suffered greatly, but desired an abundance of paper. Brokers' rates of interest and exchange stood from two to three per cent. higher than bankers'. About the first of May the banks were filled with money, for which, at that time, there seemed no demand. This fact occasioned a general alarm, and public meetings were held to discuss the situation, and, if advisable, to concert on some measures to stop further issues of paper by the Government. The situation was regarded as perilous in the extreme. Borrowers ruled the rates of interest and discount. Bank stock on April 28, 1864, was quoted as follows:

Par. $50

Sales.

Exchange Bank.

$68.50

Bank of Pittsburg

Mechanics' Bank.

63.50

Iron City Bank.

63.50

Citizens' Bank.

61.25

Merchants' and Manufacturers' Bank.

58.85

Allegheny Bank.

57.25

Manchester Savings Bank.

(b) Commercial, March 29, 1864.

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HISTORY OF PITTSBURG.

"We protest against the wholesale epithet of 'wildcat' being applied to hundreds of institutions which have always maintained a clean record, meeting their obligations with fidelity and promptness, and which have rendered the Government most signal aid. They have upheld the national credit and have taken its bonds by millions, thus encouraging the people to invest in these securities" (d). "Our city banks are well fortified with legal tender Treasury notes, and are not at all apprehensive of a precipitate return of their circulation. We heard a bank officer say yesterday that he wished this concerted flurry, gotten up in Chicago and elsewhere to drive out all bills except greenbacks and the notes of some favorite Eastern institution, would bring home the circulation of our city banks" (e).

Late in May the bankers of this vicinity had subscribed as follows to the fund for the projected Sanitary Fair:

Exchange Bank.

$2,000

Bank of Pittsburg

1,000

Mechanics' Bank.

250

First National Bank.

1,000

Iron City Bank.

750

Second National Bank.

500

German Trust and Savings Bank.

250

Farmers' Deposit Banking Company

500

Union Banking Company.

250

Merchants' and Manufacturers' Bank.

1,000

Third National Bank.

250

Allegheny Bank.

1,000

Citizens' Bank

1,000

N. Holmes & Sons

1,000

Kramer & Rahm

500

Hanna, Hart & Co.

300

Ira B. McVay & Co.

200

Hill & Co.

150

Koutz & Mertz.

I50

Robert Patrick & Co.

150

W. H. Williams & Co.

IO0

A. McTighe.

Total

$12,350

It would be difficult to say too much in praise of local banks for the liberality with which they poured out their treasure, the "sinews of war," during the entire period of the rebellion, to facilitate enlistment, equip soldiers for the field, pro- vide hospital supplies and military stores and sustain in every way the credit of the city and their own renown in the line of patriotic duty. Nor did they have to be urged to place their money where it would do the Federal cause the most good. They led in all movements-were expected by the citizens to lead- where cash was required to oil the ponderous machinery of a nation at war.

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Standard history of Pittsburg, Pennsylvania, Part 52

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