USA > Wisconsin > Milwaukee County > Milwaukee > History of Milwaukee, city and county, Volume I > Part 32
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
The first meeting of the commissioners was held at the office of Rufus Parks, January 5, 1837, and S. W. Dunbar was elected president. The sub- scriptions were slow in coming in and in the course of the following year but sixteen shares had been subscribed for, with payments of $10 made on each share. By the end of the year the entire remainder of the unsold shares (1,984) were taken by Francis K. O'Farrell, who had been appointed fiscal agent. However, dissatisfaction arose because O'Farrell made no other payment than appeared in a bookkeeping entry. Ile was authorized to proeure necessary blank books, stationery, an iron safe, etc. Mr. Junean made the first deposit and his example was followed by others.
O'Farrell did not long retain the confidence of the board. At a meeting held in February, 1838. he was required to lay before the board all books. papers and funds belonging to the bank which he failed to do. The public was warned not to pay him for stock or notes discounted. Thereupon OFar- rell retired and his purchase of stock was declared forfeited.
In 1839 the charter of the bank was repealed by the Legislature and what residuary value remained was sold to Joseph and Lyndsey Ward and Alexan- der Mitchell for a trifling sum. "Little mischief was done by the bank," says the writer of an article under this head in "The History of Milwaukee," pub- lished by the Western Historieal Company, in 1881, "as it never got enough together to make a l'air start. The times were unpropitions, the panie of 1837 left no money for the speculative purposes of wildeat banking. The history of this bank, however, shows what might have been done had times been thish. and what sort of machinery it was through which the 'red dog' banking of early times was done."
Paper Money Issues .- A great deal of the paper money of the '30s, 49s and '50s was in the form of bills issued by banks which in a large mimber of cases failed and left their obligations unredeemed. This kind of currency arquired the epithet "wildeat. " a term applied to all the issues of this char- acter. It was said that John Wentworth, publisher of a paper in Chicago, first applied the name to the issues of the state banks, and in his paper he printed
341
BANKING AND FINANCE
a picture of the ferocious animal. Wentworth, in season and out, denounced the evil system of irresponsible banking prevailing in those times.
The bills of the wildcat banks were usually engraved in an inferior style and were often counterfeited. Judge Henry W. Blodgett of Wankegan is quoted as remarking that it was not difficult to detect the counterfeit bills "because they were so much better engraved than the genuine." On one occasion a certain storekeeper, having some wildcat money offered him in pay- ment of a bill of goods, exclaimed, "Oh, see here, can't you give me something else ? If you've got any good eastern counterfeits, I'd rather have them."
The bills of the wildeat banks were generally at a discount among eastern banks at from ten to twenty per cent. But little coin was in circulation; occasionally would be seen silver pieces from the United States or Mexican mints, or a little gold and silver brought by immigrants from foreign com- tries. Very little American gold was in use. What gold coins there were eon- sisted of English sovereigns and half-sovereigns and the French "Louis d'or." The silver money was principally made up of Mexican coins which became much worn in nse.
"Thompson's Bank Note Reporter" was the authority as to the value and genuineness of all money in circulation, whether of metal or paper. Prior to 1835 practically the only subsidiary coinage in use was the silver coins just referred to supplemented by traders' serip which was good for mer- chandise. The towns issued scrip good for taxes, merchants issued serip good for the kind of goods in which they dealt. Of all this paper some was good and the rest ranged downwards in all degrees of badness to utter worth- lessness.
It was a saying in the "wildeat" times of banking, when every kind of finane al heresy was rampant in the land, that "illegal banking honestly con- dueted was better than legal banking dishonestly conducted." Throughout the middle deeades of the last century the business of the country was con- tinually menaced by the widespread practice of "wildeat banking." The idea of regulating the banking business by law was a favorite one with legis- lators, and there were laws in every state, all at variance with each other and all honestly intended to regulate the business of banking. The situation, however, was not much helped by these attempts to plare a curb upon speen- lative individuals who found in the conduet of banks a profitable channel for their operations.
This state of things continued until the period of the Civil war, when the National Banking Aet was substituted for the discordant state laws, and since that time the entire business of banking has been greatly improved, and the tendency is constantly towards a higher standard of safety in ae- cordance with the practice of sound principles of finance.
About this time the Michigan legislators conceived a "brilliant idea" which it was believed would remedy the evils caused by the specie and currency famine ; and they passed what was known as the " Real Estate Banking Law." Real estate, it was contended, was plentiful, and what could be better than land on which to base an issue of currency? Michigan bankers were author- ized to make issues based on land mortgages, and the country soon became
342
IHISTORY OF MILWAUKEE
flooded with this new variety of wildeat currency. The bubble soon burst, however, and the people looked to other schemes of financial relief which were promptly supplied. "Some of the speculators of Hlinois," said John Wentworth, "thought they would try the Michigan system, with state bonds substituted for lands. Money was borrowed and state bonds purchased. The most inaccessible places in our state were sought out for the location of banks and bills were extensively issued. The consequences of this system were (mite as disastrous as those of the real estate system of Michigan.
The Panic of 1837 .- We are now approaching the period of the severest panie ever experienced in this country, that of the year 1837. In tracing the causes of this famous panie we must momentarily take a wider view of eon- ditions as they existed in the years preceding.
Andrew Jackson occupied the presidential chair from 1829 to 1837, and the country generally was in a highly prosperous condition. In 1836 the United States was out of debt and had a surplus of nearly forty millions of dollars, largely derived from the sales of publie lands. These sales had been increasing at a tremendous rate for some years previously, and as payments were accepted by the Government in the currency of the time it began to be feared that the banks, which were the sources of issue of the paper money. would not be able to redeem their bills. The treasury surplus had been largely deposited with the banks throughout the country, and the banks had soon come to regard these deposits as sufficiently permanent to make use of the funds in an unwise expansion of loans.
About this time a proposal was made in Congress to distribute the treasury surplus as "loans" among the states, and accordingly a bill was passed on June 23, 1836, to that effect. The spirit of speculation by this time had almost reached its elimax, and President Jackson, "in his own inconsiderate and thoroughgoing manner," (as Von Holst expresses it), endeavored to check the speculative rage. On his own responsibility President Jackson issued his famons "Specie Circular," under date of July 11, 1836, in which he forbade the acceptance by the agents of the United States of anything but gold and silver in payment for public lands. After this circular had been issued it was but a question of time when the bubble would burst. "It was barely deferred," says Larned, "till Jackson went out of office, in the spring of 1837."
The effects of the panic after the deluge broke were appalling. The banks began to suspend payments of their obligations in specie, failures among mereantile houses rapidly followed and the distress became wide- spread. Trade relations were almost suspended, bankrupteies came in avalanches, and factories were elosed throwing thousands out of employment. Almost the entire business community was engulfed by the financial storm. The wild speculative madness of the previous years now began to abate leav- ing a waste of wreckage on every hand.
Writing of conditions throughout the country the German, Professor Her- mann von Holst, in his valuable work, "Constitutional History of the United States," commented thus: "The farmer, the manufacturer and merchant, instead of paying their debts, bought lands. The country merchant bought
343
BANKING AND FINANCE
lands and paid the city merchant, as well for his old debts as for his new purchases in this new eurreney, upon the strength of valuation which de- ceived himself as well as his creditors." A writer in the North American Review gives the following description: "All property seemed for a while to have lost its value. In some of the new states it was difficult even for the wealthy to obtain money for the daily uses of life. We have heard of farm- ers, owning large and well stocked farms, who could hardly get money enough to pay the postage on a letter. They had seareely any currency, and most of that which they had was bad. In the commercial states, matters were but little better. Failures were almost innumerable. Trade had fallen off, and, when proseented, was hazardous."
Recovery from the Panic .- "The outlook at the opening of navigation in the spring of 1838 was muel brighter than in 1837," writes J. S. Buck in his "Pioneer History of Milwaukee." "The great financial cloud which had covered the country was broken, and the sun of prosperity began to shine once more upon the western shore of Lake Michigan. People began to take courage ; the hard winter was past and a new lease of life seemed to have come to all. An unusual cheerfulness and vivacity of spirit was exhibited throughout the whole community. Hope in the ultimate success of the young hamlet grew stronger, causing all to feel sure that the night of commercial disaster was past, and the dawn of the morning of prosperity had come.
"Every one was at work ; new buildings were commeneed in all the differ- ent parts of the city, immigrants began to flock in, new farms were opened here and there by the hardy sons of toil who quickly made the wilderness to blossom as the rose, all of which helped to make the country self-sustaining. Roads were opened south and west, new locations for town sites were selected, to the building up of which the owners put forth all their energies, each elaiming for his partienlar loeation advantages superior to any possessed by the others, and all seemed bright and fair."
Alexander Mitchell .- This gentleman, whose suceess in business has made the city famous, came to Milwaukee from Aberdeen, Scotland, in 1839, as secretary for the Wiseonsin Marine and Fire Insurance Company's Bank, George Smith, president; and at once commeneed to lay the foundation for a life business, the growth of which has been wonderful, says J. S. Buek in his "Pioneer Ilistory of Milwaukee." Mr. Mitchell, who for executive and financial ability and business integrity, has had no superior west of New York if he has had there, at onee took the lead of the banking business in the West, supplying the whole country with a currency equal to gold. And thongh often subjected to "runs," his bank never failed to pay or redeem its bills, throughout all the commercial panies under which our country has suffered for the last thirty years.
"This famous bank," continues Mr. Buck, "was first opened in a small frame building standing upon Broadway, between Wiseonsin and Mason streets, west side, about the center of the block, in May of that year, Mr. Mitchell giving his personal attention to the business, aeting not only as its secretary, but as cashier and teller also. Here he remained until the spring of 1840, when he was joined by Mr. David Ferguson, who became his able
THESTORY OF MILWAUKEE
cashier, and the office was removed to the north side of Wisconsin Street, near the alley, in a small one-story frame house built by Mr. Juneau. Here it re- mained until the spring of 1842, when his increasing business necessitated a second removal, which was made to the old Lowry mansion, northwest corner of Broadway and Wisconsin Street where the Insurance Building now stands. Here a new and commodious office was fitted up where he remained until 1846, when the still increasing business necessitated a third removal to the lot upon the southeast corner of East Water and Michigan streets. Upon this site a suitable building was creeted, into which the office was removed. At or about this time Mr. Smith withdrew his interest, Mr. Mitchell becoming sole proprietor. Here the business was conducted until August, 1853, when the whole square was burnt. So rapid was this fire that Mr. Mitchell's "lerks had barely time to place the money and effects of the bank in its securely built vaults, before the flames reached the building. This fire was scarcely extinguished before the ground was alive with men clearing away the debris, such was the energy of Mr. Mitchell; and, Phoenix-like, a new building quickly appeared, of vastly increased dimensions, in which the busi- ness of this pioneer bank was thenceforth conducted until it was pulled down to make room for a new and costly structure.
"Such, in brief, is the history of this famous bank and banker; but it is not as a banker alone that Mr. Mitehell has been prominent. He was also one of the most successful railroad presidents in the country, never failing to accomplish whatever he undertook, as the success of the Chicago, Milwaukee & St. Paul Railroad fully demonstrated, it having become under his manage- ment one of the most powerful corporations in the country, extending its long arms into Towa, Minnesota, and Illinois, clear through to the Pacific coast.
"Mr. Mitchell twice represented his distriet in Congress, with much ability : his knowledge of and experience in money matters being of great value in settling financial issues of the day. Ile was also a prominent member of the 'Old Settler's Club,' taking a deep interest in its affairs, and felt a just pride in belonging to that early band of oldl settlers who made the first marks, and performed pioneer work in this Queen City of the Lakes.
"In person Mr. Mitchell was of medium height, stoutly built, had a keen, expressive eye, a voice clear and musical : with the Scotch accent strong, very retieent with strangers, had few intimate friends, seeing at a glance all that was being enacted around him, decided quickly, read a man like a book, and was seldom or never deceived."
Wisconsin Marine and Fire Insurance Company .- " It was near the first summer days of 1839 that Alexander Mitchell first saw Milwaukee, " said Dr. James D. Butler at the annual meeting of the Wisconsin State Historical Society, held January 5, 1888, a condensed account of which is printed in the Collections of the Society, Vohnne XI. page 437; and from which the follow- ing is substantially quoted.
Ile came thither to serve as secretary of an insurance company, so called. The first proof discoverable of his presence in that village of perhaps twelve hundred people, and which contained no frame house more than five years
345
BANKING AND FINANCE
old, is a ten-line advertisement in the Advertiser of June 15th. In this he notifies the insurance stockholders that a payment of $10 on each of their shares must be made on the first of August, at the company's office in Mil- waukee.
On the 13th of August the Sentinel printed the following notice: "Insur- ance : The Wisconsin Marine and Fire Insurance Company have commenced business in Milwaukee, and are ready to enter into contracts of insurance at low rates of premium. The Company will also receive money on deposit, and transact other moneyed operations in which by their charter they are allowed to engage."
Such, with an office ontfit eosting $280, was the birth of an institution that for more than a deeade was the only bank in Wisconsin, which for a generation held in its vaults a third of the Milwaukee deposits, and which gave to Alexander Mitchell a colossal fortune as well as more than national fame as a finaneier. Accordingly, the rise and progress of this establishment will reveal to us where lay the strength of the financier whose career is here commemorated.
Fundamental Principles Adopted .- The Wisconsin Marine and Fire Insur- ance Company was in fact a bank, with all which that name implies, yet it shunned the name of "bank." It was a coneern ingeniously devised by George Smith, a Scotch farmer who had reached Chicago in 1834, with the intention of purchasing farm lands. Friends of his in the banking business in the old country soon joined him, and turned his mind towards banking. But all parties in Illinois were crying, "Down with the banks!" The name "bank" was everywhere spoken against in those times of "wildeat" bank- ing, and a banker was as hateful as a mad dog. Many of the settlers had been driven West by the collapse of castern banks, and all of them had in their pockets "rag money" of western institutions which was not worth the paper it was printed on.
The necessity of the people for a eirenlating medium was Smith's oppor- tunity. An insurance charter granted him in Illinois, while denying banking privileges in bulk, conferred some of them in detail. He proenred certificates of deposit properly engraved with promise of payment on demand. These papers he put forth as banks do their notes, and never failed to redeem his issues the moment they were presented for payment.
George Smith's Removal to Milwaukee .- ITis success in Illinois turned Smith's eyes toward new-born Wisconsin. In that territory the Legislature met at Madison for the first time, in December, 1838. In the legislative coun- cil there was then Daniel Wells, a Milwaukee friend of Smith. To him Smith betook himself. "I know," he said, "the name of bank is as hateful in your region as that of a king in a republic. The name is a bugbear they detest, but the thing is a boon they need and will welcome. I will sugar the pill and it will prove sweet and of sovereign virtne to your body politic. Get me then a charter with franchises as like a bank as you can, but call it what you will." Wells drew up a bill modeled, as he informed the council, on one that had been enacted in New York for forming a corporation in Utica. The bill became a law.
FF FF FF FF
FF
F
ZŁ
F
.
.
FIRST WISCONSIN NATIONAL BANK BUILDING, EAST WATER AND MASON STREETS
.
347
BANKING AND FINANCE
The act allowed the company, besides insuring on ship and shore, to re- ceive money on deposit, give certificates, loan on the same terms as indiv duals, and employ its surplus eapital in the purchase of stock or in other moneyed operations, "provided nothing herein contained shall give banking privileges." Smith's charter was approved by the governor on the last of February, 1839. Early in May, subscriptions to its stock were invited in Milwaukee, and $101,- 300 was at once subscribed. It was voted that the salary of the secretary of the new-born nondeseript should be $1,100. To fill the seeretaryship Smith had a Scot ready in Chicago whom he had just imported, namely, Alexander Mitchell.
Early Life of Alexander Mitchell .- This young Scotehman was born near Aberdeen in Seotland in 1817. He was the son of a farmer and never attended any sehool except that of his native parish. Some years later he was employed in a bank at Peterhead where he became familiar with banking practice. In these years of juvenile training some signs of his characteristics must have been manifest, for he had scarcely reached his majority when on the recom- mendat on of a law firm of Aberdeen he was invited to America by George Smith, with the promise of a position there.
Thus in 1839, this young Seotehman, not yet twenty-two, and thanks to ruddy cheeks and a mild blue eye looking still younger, appeared to a Milwau- keeans too young and inexperienced to be trusted with the management of a bank ; but Smith had measured his man more justly. From first to last Smith left everything in the hands of his young lieutenant and he quickly proved his worth and ability. "This Caledonian stripling, whose nationality was be- trayed in every word of his tongue," said Doctor Butler in his address, "was as retieent and taciturn as if he wished to hide his origin. Ilis spruce but not costly attire, and partienlarly a very long-tailed dress-eoat and pantaloons of Scotch plaid, were a theme of sportive remark. He lodged in his office, swept it himself, and was his own factotum. He went little mto society and was seldom seen abroad."
Among his callers he was always found at his post, and "what is more," continues Doetor Butler, "with insight into the standing of every man as well as the value of all property, no less than if he had been to the manner born. One seeret of his apparent 'omniscience' was the fact that he boarded at the house of Smith's friend Wells, whose knowledge extended over the whole region and baek to its settlement, and whose judgment equaled his knowledge."
To save appearances the Smith Insurance Company issued a few policies against aceidents by fire and flood, but its principal dealings were of another nature. Multitudes of new arrivals in the country were then seeking farms west of Lake Michigan. Homesteads ought to have been free to such a yeomanry. Payment was required by the Government for every acre, and that in advance, for the homestead laws were not enacted until 1862. Sueh payments could not be made by settlers, but if they were once masters of their land their labor would soon double its value. In a biography of Gahisha A. Grow, speaker of the House of Representatives in Lineoh's time, "true statesman, patriot in so large a sense that today we are reaping a harvest
318
HISTORY OF MILWAUKEE
which he helped to sow and largely cultivated," the writer says that "he did historical work which should make him proportionately honored."
The Homestead Laws of 1862 .- To the foresight and persistence of Grow we owe, in great part. "the settlement of the Far West with genuine homes. the peopling of vast tracts with carnest homesteaders who could give that invaluable element, personal interest, to the task of breaking open the con- tinent, and the retention to such people of a considerable part of the domain which, in 1850, was in so large a measure not only new possession but entirely unassimilated, " says his biographer.
Much of the business of Mitchell's bank soon took the form of assistance extended to these prospective homeseekers. When the lands were selected by the incoming settler, Mitchell offered to purchase the land from the Gov- ernment and give him a contract to deed the title at the end of four years at a moderate advance on the cost. Owing to this liberal arrangement on the part of the bank hundreds were enabled to make a start in life which would otherwise have been impossible. "Their debt to him in this regard." says Doctor Butler, "is still held in grateful remembrance at many a farmer's fireside."
Another branch of the Mitchell business which soon became gigantic was issuing certificates of deposit." About six months after he opened his office- that is, in March, 1840, the amount in circulation was less than $5,000," says Doctor Butler in his address. "But within ten years it had run up to a full million, and for years after it still grew. These certificates had the similitude of bank notes and bore on the left an Indian, and on the right a goddess pointing to a shield. They promised payment on demand. and they never failed to be paid on presentation."
Many of the competing banks which issued "promises to pay" elained to be based on solid foundations because required by law to keep a certain large percentage of specie on hand for redemption purposes and were fre- quently inspected. The specie so held often did duty in other banks than the one to which it belonged. The reserve of one bank was so manipulated that it often performed a similar function in ten banks. The inspector would see it one day in "Bank A" but it would be spirited away to "Bank B" before the bank official could arrive there: and so through all the bank alphabet it still outstripped the inspector.
Those who took the first Mitchell certificates made many trials to get specie for paper. As early as 1841, some of the paper money issued by the bank turned up in Laporte, Ind., where no convertible paper was then in circulation. A hundred dollars worth of these issues were gathered up by incredulous holders and a messenger dispatched to Smith's Chicago redemp- tion office. The prompt return of the messenger with the specie. dollar for dollar, seemed a "miracle" to the holders which vastly increased the faith in Milwaukee paper. Thus confidence was established and this paper was more and more songht for.
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.