USA > Tennessee > Davidson County > Nashville > History of Nashville, Tenn. > Part 31
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At this time the rates of gold and silver were from 10 to II per cent. premium; treasury notes, 10 per cent. ; United States notes, from 9 to 10 per cent. ; checks on the East, from 8 to 9 per cent .; on Kentucky, from 8 to 9 per cent. ; on Indiana, from 7 to 8 per cent .; on New Orleans, from 3 to 4 per cent. By October I these rates had decreased about one-half, and by January 1, 1839, the banks had so assisted in shaping commercial affairs that they were ready to resume and did resume specie payments. However, notwithstanding this resumption, the stringency which it was expected to relieve continued for some time, and great complaint contin- ued to be made. The reasons assigned for the continuance of the strin- gency were that the crops of that year had failed, hence there was not much produce to sell with which to bring money into the country, and there was a heavy foreign debt which took money out of the country. Tennessee bank-notes would not do to take to the East; nothing but East- ern funds or specie would serve the purposes of merchants there. For this reason the banks here were obliged to be always ready to supply the demand for Eastern funds, or otherwise they must carry the more specie.
By June, 1839, the distress had again become very great. On October 9 the Philadelphia banks again suspended specie payments. They were followed on the Ioth by those of Baltimore, and soon by other banks in the South and South-west. The banks in Nashville suspended on Satur- day morning, October 19, with the exception of Yeatman, Woods & Co. who had but little paper out and had plenty of specie to meet it as it was presented. The reasons for this suspension are somewhat peculiar to that day, and hence may bear a brief recapitulation to show the con-
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nection of events in the commercial world widely separated from each other.
The Chinese Government had for a long time opposed the importa- tion into that country of opium from India, having forbidden it in 1796. Notwithstanding this attempted prohibition, the trade continued to in- crease through the efforts of smugglers. Finally, in 1839, a proclamation was issued announcing hostile measures on the part of the Government of China. The English opium ships were warned away, and over twen- ty thousand chests of opium were destroyed, valued at about $10,000,000. Opium could not, therefore, for a time be used as an article of exchange with the Chinese people, and specie was compelled to take its place. The Bank of England was forced to make a loan of the Bank of France, and also to issue £2 notes. As the balance of trade was then against the United States, demands for specie came to this country, and every pack- et ship carried away from $500,000 to $1,000,000 in specie. This ex- portation of specie caused a great stricture in bank discounts. Banks could not discount paper because their bills came back upon them almost immediately for specie. It was necessary, therefore, to suspend specie payments in order to keep the specie in this country, and to stop discount- ing notes also to a great extent.
The course of the banks in Tennessee in following the lead of the Philadelphia and Baltimore banks in suspending specie payments was not altogether satisfactory to the Legislature, and an attempt was made in that body in September to pass resolutions requiring the immediate re- sumption of specie payments, which attempt, however, was not a success. In October the Union and Planters' Banks united in an explanation to the Legislature setting forth the reasons at some length which induced them to suspend. On the 18th of that month, they said, there had been a gen- eral suspension of specie payments throughout the country. The drain of specie from Nashville had been heavy for some weeks, and there were then several brokers from other cities in Nashville, who had been selling checks in large amounts on other cities, for the paper of Nashville banks, which was payable at their counters only, and as it was known that heavy demands would be made on the banks for specie on the 18th, it was for this reason decided to suspend. They said they considered the suspension temporary, however, and they intended to use every effort to bring about resumption at the earliest practicable moment.
An effort was again made in November following to get a resolution through the Legislature requiring the banks to resume, but it failed by a vote of sixty-two to eleven in the House. Some time afterward, but in the same month, the Bank of the State of Tennessee adopted a regula-
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tion to furnish Eastern exchange in return only for its own paper and that of its branches. The consequence of this regulation was that its notes ceased to be a part of the ordinary circulation. Being more valu- able, they were bought and sold at a premium of 2 or 3 per cent. This course produced an extraordinary pressure upon the community, which was felt all over the State. In December the House of Representatives passed a resolution requiring the banks in the State generally to resume spe- cie payments, but the question was indefinitely postponed in the Senate.
In January, 1842, John M. Bass was President of the Union Bank; John Sommerville, Cashier; and William S. Pickett, Assistant Cash- ier. During the year the banks were preparing to resume specie pay- ments. In June it was announced that the Union Bank had on the way from New York $50,000 in silver, and that the branch of this bank at Memphis had just received $35,000 from New Orleans. This last amount was, however, to be transferred to Nashville, where nearly all of the circulation was made redeemable. On June 6 the Planters' Bank re- duced its rates of exchange, which was deservedly commended because of its salutary effect upon resumption. The Union Bank immediately de- termined to check on New York at the same rates, and after this reduc- tion the rates of exchange were from 2 to 5 per cent. On July 28, 1842, the banks resumed in full, northern exchange was from 21/2 to 3 per cent., and all Nashville paper was quoted at par. After a few months' experience with resumption the officers of the banks were surprised, and agreeably so, at the small amount of specie withdrawn from want of con- fidence in the banks or for purposes of hoarding. On September 10 the aggregate circulation of the Union and Planters' Banks had been re- duced to $550,000 within the preceding three months, at the beginning of which time it had been $1,200,000. A proportionate reduction had likewise been made in the circulation of the Bank of Tennessee and its branches, and also in that of the Memphis banks. Colonel Willoughby Williams, who had been for some time President of the Bank of Tennes- see, resigned that position March 2, 1843, and was succeeded by Felix Robertson. Joseph W. Horton was the Cashier. Hon. A. O. P. Nich- olson was President of the Bank of Tennessee after Colonel Williams, and Hon. Cave Johnson became President in January, 1854, and served six years. John Sommerville, the veteran bank cashier, died of heart disease April 26, 1846. John M. Bass continued President of the Union Bank, and in 1846 J. Correy was Cashier, succeeding John Sommerville. In December, 1859, Granville P. Smith was elected President of the Bank of Tennessee; John A. Fisher, Cashier, succeeding James Mor- ton, who had succeeded General S. R. Anderson.
19
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On November 26, 1860, several merchants and citizens of Nashville addressed a letter to W. A. Quarles, Esq., Supervisor of Banks, asking his opinion as to whether the banks could weather the political and com- mercial storms then impending, and as to the advisability of the suspen- sion of specie payments. To these questions Mr. Quarles replied at great length, advising a temporary suspension; the banks so suspending should follow a line of liberal but prudent discounts and renewals; they should check at a maximum rate of one-half of one per cent. and they should furnish in exchange for their notes small sums of coin, sufficient for the ordinary wants of the community; and they should resume as soon as the causes leading to the suspension were removed.
The condition of the three banks was set forth by Mr. Quarles as fol- lows: The Bank of Tennessee was indebted to note-holders and deposi- tors, $1,768,639; to other banks and bankers, $50,160; to the State Treasurer, $38,4II: a total amount of $1,857,210. To meet this in- debtedness it had specie and exchange on hand, $1,072,296; due from the Treasurer, $52,451 ; State bonds, $156,000; domestic bills, $1,098; discounted notes, $1,850,903: total, $5,130,158. The Union Bank was indebted to note-holders and depositors, $1,579,482; to other banks, $28,644: total, $1,608,132. To meet this indebtedness it had gold and silver to the amount of $536,711; domestic bills, $1,310,848; discounted notes, $1,308,834: total, $3,156,393. The Planters' Bank was indebted to note-holders and depositors, $1,701,069; to other banks, $119,931 : total, $1,821,000. To meet this indebtedness it had specie and specie funds, $667,545; domestic bills, $1,802,594; discounted notes, $1,076,- 485: total, $3,546,624.
Mr. Quarles said in his report that the causes then at work had de- stroyed public confidence, and that every dollar of specie withdrawn from the banks made it necessary under the law for the banks to contract their circulation to the extent of $3. This abstraction from the circulating medium, already too small, at a ruinous ratio, would, if persisted in, inev- itably ruin the country.
When it became evident that the Federal forces would occupy Ten- nessee the banks were given permission to remove their assets to other States. The Bank of Tennessee was transferred to Georgia, and its specie deposited in Atlanta, where it afterward fell into the hands of the United States authorities. Its assets, however, to the amount of over $8,000,000 were invested in Confederate bonds, which became valueless on the restoration of peace. In February, 1866, an act was passed to wind up the affairs of this bank, the Governor being authorized to nomi- nate the Directors to manage the business. Accordingly, on the 20th of
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the same month, Governor Brownlow nominated Samuel Watson, of Cheatham County; John Baird, of Maury County; and W. T. Berry, A. V. S. Lindsley, H. G. Scovel, and A. Lovering, of Davidson County. These gentlemen were confirmed on the 27th of February by a vote of 18 to 4, and proceeded to settle the affairs of the bank.
The Union and Planters' Banks were similarly wound up after the war, the former by Joseph W. Allen, who had his office at No. 34 College Street, and the latter by Mr. Dempsey Weaver.
It is a noteworthy fact in the history of banking in Tennessee that, following in the footsteps of New York, this State in 1852 passed a law which has ever since been known as the "Free Banking Act," contain- ing the essential principle upon which the National banking system is based. It is evident that the legislators of Tennessee thoroughly studied the law of New York, and it is most probable that they also studied the experience of New York with her free banking act. The language of the New York statute, which became a law April 18, 1838, so far as it is of interest in this connection, is as follows :
" Whenever any person or association of persons formed for the pur- pose of banking under the provisions of this act shall legally transfer to the Comptroller any portion of the public debt now created or hereafter to be created by the United States or by this State, or by such other States of the United States as shall be approved by the Comptroller, such person or association of persons shall be entitled to receive from the Comptroller an equal amount of circulating notes of different denomina- tions ; but the public debt shall in all cases be or be made equal to a stock producing five per cent. per annum, and it shall not be lawful for the Comptroller to take any stock at a rate above its par value."
The law of Tennessee, which was to some extent a copy of the above New York law, was passed February 12, 1852, and was entitled “An Act to Authorize and Regulate the Business of Banking." By this act any person or association of persons having at least $50,000 capital were authorized to carry on the business of banking in all of its various branches whenever such association of persons should legally transfer to the Comptroller any portion of public stocks then created or thereafter to be created by this State, or bonds of the United States, or bonds of incorporated companies indorsed by the State, notes to the same amount to be issued to such association, "provided the public stocks shall in all cases be or be made to be equal to a stock producing six per cent. per annum," and such banks were also required to keep on hand in specie at all times as much as ten per cent. of their circulation.
It will be observed that in the case of each State the principle involved
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was the same-viz., the security required to protect the notes in circu- lation was some portion of the public debt, though in New York greater latitude was allowed in the range of securities accepted by the Comp- troller. In the case of the National banks notes are issued by the Comp- troller of the Currency only to the extent of ninety per cent. of the current market value of interest-bearing United States bonds deposited, which bonds must be equal to at least one-third of the capital stock of the bank. The history of banking appears to have established the fact that the public debt is the only permanently safe basis for a bank-note circulation, and also the further fact that prompt convertibility into specie is the only safeguard against the evils of a fluctuating or depreciated cir- culating medium. When the National debt shall have been paid, upon what principle will be based our system of National banks?
At the beginning of the war there were five banks in Nashville organ- ized under the general banking law of the State. These were the City Bank, located on College Street near Union Street, of which Dyer Pearl was President and E. G. Pearl Cashier; the Bank of Commerce, at the corner of College and Union Streets; the Traders' Bank, at the cor- ner of Cherry and Union Streets; the Bank of the Union, at No. 24 Cedar Street; and the Merchants' Bank, at No. 50 North College Street. All of these banks were of course broken up by the war.
The First National Bank was organized in 1863, and began operations in the building now occupied by the Commercial National Bank. It was the first National bank organized in the South. Its certificate is num- bered 150, and the bank was rechartered in 1884. The capital has been increased from time to time until at present it is $1,000,000, all paid in. The Mechanics' National Bank was consolidated with this bank in 1880, and in 1883 the Merchants' National Bank was also absorbed. During the first twenty years of the existence of this bank its original capital, which was $250,000, was returned to the stockholders about five times, or in other words over $1,000,000 was paid out in dividends. Follow- ing is a list of the officers of this bank since its establishment: Presi- dents: A. G. Sandford, 1863-70; M. Burns, 1870-78; S. J. Keith, 1879; N. Baxter, Jr., 1880-85; Thomas Plater, 1885-90. Vice-presi- dents: T. M. Steger, 1878-79; S. J. Keith, 1880-82; James C. Warn- er, 1883; Thomas Plater, 1884-85; John P. Williams, 1886-90. Cash- iers: James G. Ogden, 1863-66; J. C. McCrory, 1867-69; R. G. Jamison, 1870-72; W. C. Butterfield, 1873-74; Theodore Cobley, 1875- 79; John P. Williams, 1880-85; H. W. Grantland, 1886-90. Assistant Cashiers: R. S. Jamison, 1863-69; Theodore Cooley, 1873-81; W. F. Bang, Jr., 1884-90. Following are the names of the Directors at the
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present time: Thomas Plater, Nathaniel Baxter, Jr., Thomas D. Fite, W. M. Duncan, John F. Fletcher, G. M. Fogg, T. W. Wrenne, M. J. O'Shaughnessy, H. W. Grantland, John C. Gordon, B. F. Wilson, J. H. Yarbrough, J. C. Warner, Charles D. Porter, J. W. Thomas, George W. Stainback, J. P. Williams, S. L. Demoville, M. J. Smith, Henry Metz, T. M. Steger, John P. White, and George A. Dazey.
The Second National Bank of Nashville was established in February, 1865, by Nelson & Murfree, then active real estate agents. The charter was obtained by Mr. Anson Nelson from Hugh Mccullough, then Comp- troller of the Currency. Mr. Nelson was the first President; S. J. Keith, Vice-president; and John Sims, Cashier. At the close of the first year's business Mr. Nelson retired from the head of the institution, his real estate business demanding his entire attention, and J. Lumsden was elect- ed President, with W. J. Thomas Cashier. The bank was very suc- cessful for several years, and made large profits ; but finally, in 1874, went into liquidation on account of large losses sustained by discounting cot- ton bills-a fruitful source of evil and one that has caused many banks and brokers to fail all over the South.
The history of the Third National Bank of Nashville had rather a ro- mantic origin. In the summer of 1864 Joseph W. Allen, with some other Nashville men, was spending the summer in Croton, Conn. The Hon. Edmund Cooper, of Shelbyville, was also there, and one day Mr. Allen suggested to Mr. Cooper the advisability of establishing another National bank in Nashville. Michael Burns, Esq., was also spoken to on the sub- ject, and each of these gentlemen agreed to take $10,000 of the $100,- ooo proposed as the capital stock of the bank. After returning home in the autumn Mr. Allen kept the matter in mind and conferred with Mr. Dempsey Weaver, who was the trustee for winding up the affairs of the old Planters' Bank, as Mr. Allen was the trustee for winding up the Union Bank. The names suggested by Mr. Allen to take stock in the proposed new National bank were of those mainly who had held stock in the old institutions which Mr. Allen and Mr. Weaver were winding up. Early next year the organization was effected, the stockholders being Joseph W. Allen, W. W. Berry, Edgar Jones, Alexander Fall, C. E. Hillman, D. F. Carter, M. Burns, A. J. Duncan, D. Weaver, John Kirkman, and Edmund Cooper; Mr. Allen dividing his subscription with Mr. Jones, it being desired that Mr. Jones should be the Cashier of the new bank. The charter was signed June 16, 1865, and the bank went immediately into operation-W. W. Berry, President; and Edgar Jones, Cashier. The bank was remarkably successful from the first, and made large dividends to the stockholders. After the establishment of the
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American National Bank, the Third was merged into that institution, in order that the bank might have a capital of $1,000,000. After the death of Mr. Berry, Mr. John Kirkman became President of the Third, and served until the American National was established, and then became President of that and remained so until his untimely death, which is men- tioned in the history of the American National Bank.
The Fourth National Bank was organized February 16, 1867, with a capital of $200,000. Business was opened on May I following. On November 3, 1870, it was decided to increase the capital stock to $500,- 000, the new capital being paid in January 1, 1871. Besides paying good dividends, the bank soon laid by a surplus of $100,000. The charter was extended in 1887, and was renewed for twenty years. During the same year the bank was made a United States depository. On April I of this same year the capital stock was increased to $1,000,000, and the surplus and undivided profits at the same time amounted to $250,000. The Presidents of this institution have been Judge James Whitworth from 1867 to 1882, since when the President has been S. J. Keith; John Por- terfield was Cashier from 1867 until 1874, when he died, and was suc- ceeded by Thomas Plater, who served until February, 1881, when he re- signed to become President of the First National Bank. He was fol- lowed by William McCarthy, who was Cashier until September, 1885, when he was succeeded by the present Cashier, Joseph T. Howell. The first Board of Directors consisted of Samuel Watkins, R. H. Gardner, Daniel Hillman, Andrew Hamilton, Byrd Douglas, W. H. Evans, B. S. Rhea, James Whitworth, and O. F. Noel. The present Board is as fol- lows: N. McClure, Leonard Parks, William Litterer, W. C. Dibrell, J. M. Dickinson, S. J. Keith, M. M. Gardner, T. J. O'Keefe, J. E. Cald- well, J. H. Fall, E. Kirkpatrick, J. H. Young, J. W. Hopkins, Robert Orr, J. W. Manier, W. N. Johns, George M. Jackson, Charles Thur- man, J. S. Cooley, T. P. Bridges, James Whitworth, O. F. Noel, and Henry Hart.
The American National Bank was established in the summer of 1883. On June 23 application was made to Hon. John J. Knox, Comptroller of the Currency, for permission to organize a National bank, the applica- tion being signed by E. W. Cole, John M. Lea, John Woodard, A. W. Harris, Robert A. Young, L. F. Benson, and T. A. Atchison. A reply was received June 29, granting the permission asked. The bank was thereupon organized with a capital of $500,000, which was soon after- ward increased to $600,000, and still later increased to $1,000,000. The articles of association were signed July 6 by twenty gentlemen, and there were at the beginning two hundred and twenty-five stockholders.
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James Whitworth
Edgar Jones.
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At a meeting of the stockholders held July 24 Directors were elected as follows: E. W. Cole, John M. Lea, A. W. Harris, John Woodard, John G. Houston, L. F. Benson, F. P. McWhirter, J. A. Pigue, R. A. Young, T. A. Atchison, Robert Orr, G. W. Stainback, Byrd Douglas, Jr., J. W. Manier, and R. L. Weakley. The next day officers were elected as follows: President, E. W. Cole; Vice-president, John M. Lea; Cashier, A. W. Harris. On August 6 a room was rented in the Cole building, at the north-east corner of Cherry and Union Streets, in which business was commenced August 16. The certificate of this bank is No. 3,032. The first annual meeting was held January 10, 1884, at which time the same officers were re-elected. On February 8, 1884, the Directors called a meeting of the stockholders for the purpose of considering the question of increasing the capital of the bank to $1,000,000, and of in- creasing the number of Directors from fifteen to twenty-two, the object being to consolidate the Third National Bank with the American Nation- al Bank. The Directors of the Third National Bank at the time were John Kirkman, W. W. Berry, J. F. Demoville, V. L. Kirkman, and C. E. Hillman, and the capital stock of the bank was $300,000. This add- ed to the $600,000 capital of the American National Bank made $900,- 000, and the other $100,000 was raised by subscription. On the 21st of February E. W. Cole resigned the presidency of the bank, and was succeeded by John Kirkman; and the by-laws being amended so as to permit of the election of two Vice-presidents, Edgar Jones was elected Vice-president to serve with John M. Lea. The Executive Board was then made to consist of the President, the Vice-presidents, and the Cash- ier, and Ex-president Cole was elected President of the Executive Board. At the expiration of the lease of the room in the Cole building, January 1, 1889, the bank purchased a building on College Street, just below Union Street, which at considerable expense it fitted up for its own pur- poses. This bank building is the handsomest and most complete in its appointments of any bank in the South. On August 1, 1888, a sad acci- dent occurred to Mr. Kirkman, President of the bank. He was out driv- ing, and by a slip of his horse's foot he was thrown forward and caught between the horse and the thill of his sulky, and in this position was dragged several hundred yards and killed on Broad Street near the Chattanooga railroad office. Mr. Edgar Jones was afterward elected President of the bank, and retains the position to the present time. The office of Vice-president held by Mr. Jones was at the time of his elec- tion to the presidency declared vacant. On August 31, 1888, the office of Assistant Cashier was created, and W. N. Tippens elected to that posi- tion. The present officers of the bank are as above indicated. This
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bank has always enjoyed a healthy and profitable business, and has paid an annual dividend of eight per cent. and it has accumulated a surplus of $75,000.
The Commercial National Bank was organized July 15, 1884, with a capital of $200,000. This capital was increased January 1, 1885, to $250,000, and on February 1, 1887, to $400,000. It was again increased, April 1, 1890, to $500,000. On April 1, 1890, the surplus and undivided profits amounted to $150,000. The officers of this bank have always been as at present-viz., President, M. A. Spurr; Vice-president, Jo- seph H. Thompson; Cashier, Frank Porterfield; Assistant Cashier, Rob- ert S. Cowan. The Directors of this bank at this time are: M. A. Spurr, Joseph H. Thompson, E. P. Richardson, R. H. Dudley, W. E. Norvell, J. H. Collins, J. A. Thomas, W. A. Wray, W. D. Mayo, Sam- uel Cowan, A. Marshall, Robert B. Lee, Joseph Frankland, J. Junger- man, D. C. Scales, J. M. Head, A. W. Wills, T. L. Herbert, Frank Porterfield, G. W. Fall, and Thomas Pepper, the latter of Springfield, Tenn. The interior of this banking house is notable for its beauty, be- ing fitted up with light-colored hard wood. The business of the bank has been very prosperous, a dividend of eight per cent. per annum, pay- able quarterly, having been declared since January 1, 1886.
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