History of Milwaukee from its first settlement to the year 1895, Part 49

Author: Conard, Howard Louis, ed. cn
Publication date: 1895
Publisher: Chicago and New York, American Biographical Publishing Co
Number of Pages: 840

USA > Wisconsin > Milwaukee County > Milwaukee > History of Milwaukee from its first settlement to the year 1895 > Part 49

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Friction developed early among the officers.

The removal of Jesse Rhodes from the territory created a vacancy in the directory; the selection, by a narrow majority, of Alanson Sweet as his successor afforded an opportunity, if it did not furnish the cause, for much wrangling. Indeed, there were more bitter words than business trans- actions. It was not until December 18, 1837, that a resolution passed the board "to procure for said Bank of Milwaukee plates, books, paper, iron safe, etc., etc., for the use of said bank." Up to this time there had been scant need of such articles, for one hundred and sixty dollars, the first instalment upon sixteen shares of stock, constituted the bank's finances. But on this last-mentioned day, a certain Francis Kelly O'Farrall, under permission previ- ously granted, subscribed for the remaining nine- teen hundred and eighty-four shares, and was ap- pointed fiscal agent and cashier. This subscrip- tion gave an impetus to business, for on Decem- ber 30, 1837, the board "discounted and received a special deposit from S. Juneau," and the entire body of stockholders, O'Farrall included, paid in forty per cent. of their subscriptions. At least, so the minutes state, but the payment, so far as the large stockholder was concerned, was clearly only a matter of book-entry, for O'Farrall was both payor and payee. The "banking-house" was the office of Rufus Parks, who was the receiver of public moneys.

There seems to have been at least two discounts between the last mentioned date and February 19, 1838. On that day evidences of insecurity in the minds of the directors appear. Mr. O'Farrall was directed to file a bond as fiscal agent and bring all the property of the bank before the board, while at the same time a call of forty per cent. was made on the stock. 'What the fiscal agent did about the bond is not disclosed, but the demand to produce the assets was met with a peremptory refusal. He was thereupon removed and the board, under the advice of its attorney, Don A. J. Upham, took steps to protect itself against any negotiable paper in O'Farrall's possession and against any stock which he might attempt to vend.

The further retrograding and, hence, melan- choly history of this bank can be briefly told. The call for forty per cent. on the stock elicited no favorable response. The last meeting of the directors of which record is given was held at the house of Owen Aldrich on December 27, 1838. James Sanderson was then president of the board

* Charles H, Larkin, the last survivor of these early bankers, died as this chapter was being prepared, August 16, 1894.

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HISTORY OF MILWAUKEE.

and Charles H. Larkin, secretary. The last re- corded act was the election and qualification of John S. Boyd as cashier-nomen et praeterea nil! -of the Bank of Milwaukee.

The next act in this tragi-comedy was the in- terference of the legislature. In December, 1838, a joint resolution was adopted (Laws of 1839, Ap- pendix, page 2) appointing two special commit- tees, one to investigate the affairs of the bank of Wisconsin, the other to perform a similar duty concerning the banks of Mineral Point and Mil- waukee. These committees were to visit these in- stitutions, " examine their books, count the gold and silver, bills of other banks, notes payable and deposits on hand, and to enquire by oath or af- firmation of their several officers or any other persons, into such facts" as might enable the com- mittees to discover and report whether the char- ter requisitions had been fully met. What the special committee reported with regard to the bank of Milwaukee is evident from the following act, which is chapter 60, laws of 1839, and which was approved March 11, 1839 :*

WHEREAS, It appears from the report of the committee appointed by a joint resolution of the two houses of the legislature, at its last session, to investigate the affairs of the Bank of Milwaukee, that said bank has not gone into operation according to the requisitions of its charter; therefore,

Be it enacted by the Council and House of Representatives of the Territory of Wisconsin:

That an act entitled "an act to incorporate the stockholders of the Bank of Milwaukee," approved November 30, 1836, be and the same is hereby repealed, and that the charter granted by said act be and the same is hereby annulled, vacated and made void.

As the historian has not informed us whence Fiscal Agent O'Farrall came, so it is not recorded whither he went. His stock, and that of the other stockholders, burdened by unpaid assess- ments and the bank's liabilities appear to have vested in Alanson Sweet. On August 2, 1842, he transferred for one dollar twelve hundred and fifty of these shares to Joseph Ward and Lyndsey Ward, and on February 5, 1846, the same Mr. Sweet, for the same consideration, assigned seven hundred and forty-nine shares to Alexander

Mitchell. Here the history of the Bank of Mil- waukee ends.

This account of the failure of the earliest Mil- waukee bank has been purposely minute. Its brief and untoward career had an influence on the mind of the times and assisted, with the other reasons hereinbefore indicated, to cause the legis- lative eye to look askance at all banking ventures. Evidences of this disapprobation will appear as the narrative advances.

While the directors of the Bank of Milwaukee were selecting Mr. Boyd cashier of a concern which had no cash, the Legislative Assembly of 1838-9 was gathered in Madison. Attention is called to two acts passed at its second session, which began January 21, 1839. One of these enactments (laws of 1839, chapter 32) was the incorporation of the State Bank of Wisconsin. The charter which was approved by Governor Dodge, February 25, 1839, was the last bank charter (not including savings institutions) ever granted by the legislature of the territory or state. The concession was repented of and the charter repealed April 10, 1843 (laws of 1843, page 62).

The other enactment of 1839, which greatly concerns this history, was the act to incorporate the Wisconsin Marine and Fire Insurance Com- pany (laws of 1839, chapter 36, approved Feb- ruary 28*, 1839).

An account of the origin of this legislation is not unimportant. George Smith of Aberdeen, Scotland, had been in Chicago as far back as 1834 for the purpose of purchasing farming lands. Then, or somewhat later, he represented the Scot- tish Illinois Land Investment Company. Led to believe that there was more profit in banking than in land trafficking, he obtained from the Illinois legislature a charter (laws of Illinois 1836, page 30, approved January 13, 1836) for the incorpor- ation of the Chicago Marine & Fire Insurance Company. This charter, in obedience to the pre- vailing antipathy, laboriously withheld banking franchises in words, and yet conferred some privi- leges which peculiarly appertain to banking in- stitutions. Mr. Smith's success was so marked in Chicago that he determined upon a similar enter-

* As to the other Wisconsin hanks established in 1835 and 1836, the Bank of Wisconsin declined to permit the Legislative Committee to investigate, and thereupon the attorney-general was directed to wind up its affairs (chapter 55, laws of 1839); the charter of the Bank of Mineral Point was repealed by act approved February 18, 1842, after the community had suffered a loss of over $200,000; the Miners' Bank of " Du Buque" seems to have died without legislative assistance.

* This is the date given in the printed laws. The original draft of the bill, showing its progress through both houses and indicating the amendmenta made, gives February 27, 1839, as the date of approval.

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prise in Milwaukee, not deterred by the so recent failure of the Bank of Milwaukee. Daniel Wells, Jr., was a member of the legislature of 1838-9, and an acquaintance of Mr. Smith. The latter waited upon Mr. Wells and explained his desires, and a bill was drawn for introduction into the legislature, modeled, as Mr. Wells stated to his fellow Solons, upon an insurance charter in use in Utica, New York .* This bill, amended by adding Section 10, hereinafter quoted, became by passage and approval chapter 36, laws of 1839.

The powers with which the Wisconsin Marine & Fire Insurance Company were clothed, the privilege which was expressly withheld, were set forth in detail. The corporation had authority to make contracts of insurance upon life and against losses or damages by fire or otherwise of any houses or boats, ships, vessels or buildings, and of any goods, chattels or personal estate : and to receive money on deposit, and loan the same on bottomry, respondentia, or other satisfactory security at such rates of interest as could be done by individuals. The remaining enabling clause is worthy of literal reproduction : The corporation "may employ all such capital as may belong or accrue to the said company in the purchase of public or other stocks, or in any other moneyed transactions or operations for the sole benefit of the said com- pany ; and in general the said company may tran- sact all business usually performed by insurance companies, provided nothing herein contained shall give the said company banking privileges."

The value of a share of stock was fixed at twenty-five dollars, the number of shares was lim- ited to twenty thousand. On the first Monday of May, 1839, subscription books were to be opened in Milwaukee, and James H. Rogers, Allen W. Hatch, Maurice Pixley, Hans Crocker, Samuel Brown, Chauncey H. Peak and William Brown were designated commissioners of subscription.

Two dollars per share were to be paid at the sign- ing. Provision was made for five directors, for holding the annual meeting on the first Monday in June and for the corporate death of the com- pany on the first Monday of January, 1868.

Section 10, which was inserted in the bill on its journey through the legislature, thus reads:

In case of any loss or losses taking place which shall be equal to the amount of the capital stock of said company, and the president and directors after knowing of such loss or losses having taken place shall subscribe to any policy of insurance, their estates, jointly and severally, shall be accountable for any and every loss which shall take place under policies so sub- scribed, and all moneys received on deposit if in billa, notea or other evidences of debt paid hy a bauker, bank or other corporation, and loaned by the company hereby chartered, ahall be endorsed by the president of said company with the cor- porate name thereof, and shall be redeemed at their usual place of business in gold or silver on demand, if auch banker, bank or other corporation ahall fail.

At the time fixed, the commissioners opened the stock book and four thousand and fifty-six shares were taken. The subscribers were William Brown four shares; Hans Crocker, two shares; Benjamin H. Edgerton, four shares; Daniel Wells, Jr., ten shares; Chauncey H. Peak, eight shares; Allen W. Hatch, five shares and George Smith four thousand and twenty-three shares. On the evening of May 7, 1839, the qualified shareholders gathered at the Milwaukee House and elected as directors, Hans Crocker, William Brown, Patrick Strachan, William D. Scott and George Smith. Later, upon the same evening, Mr. Smith was chosen the president of the company. As the term of these five directors was but a fragment, the stockholders on June 3, 1839, met and selected for the full term Patrick Strachan, Thomas Webster, George Smith, Alexander Mitchell and William Smith. This is the first introduction of Alexander Mitchell to Milwaukee, and the last named date approxi- mates the beginning of his residence.

Of these last named directors all were non-resi- dents of Milwaukee except young Mitchell. Upon this Caledonian youth of twenty-one years fell the brunt of the business. He was the secretary of the corporation upon an annual salary of one thousand one hundred dollars, and the earliest printed evidence of his existence here is a notice signed by him as secretary in the Milwaukee Advertiser of June 15, 1839, calling an assessment upon the stock.

Mr. Mitchell and a safe had arrived together by steamer from Chicago; and in an office on

*The statements in this paragraph are based on Dr. Butler's Alexander Mitchell, the financier, XI. Wisconsin Historical Collections, 436. It has, however, been denied by others, either that Mr. Smith obtained the incorporation of the Chi- cago company, or that he was ever connected therewith. But it is certain that the name of the Milwaukee corporation and some clauses of its enabling act are sufficiently like the law forming the Chicago Marine and Fire Insurance Company to have been borrowed from it. It is also true that no law of New York incorporating a Utica concern has yet been found which could have been a close model for the Milwaukee corporation, unless Mr. Wella had in mind an Act to incorporate the Oneida Insurance Company. Chapter 57, laws of New York, of 1832.

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HISTORY OF MILWAUKEE.

Broadway,* with two hundred and eighty dollars and forty-four cents in furniture and equipment, began, in the disguise of an insurance company, the first successful bank in Wisconsin, for, bank it must needs be called. It certainly issued a few policies of fire and marine insurance, perhaps it took some risks on lives ;} but these were but the accidents, subterfuges, devices, whatever it is pleased to call them, of a banking institution whose charter forbade a banking business.

A few words should be said about this legisla- tive proviso against the banking privilege. It was not introduced for the first time into this charter. It is found in 1836 in the enabling act of the Chi- cago Marine & Fire Insurance Company. When the Wisconsin Insurance Company at Green Bay was incorporated (laws of 1837, chapter 29; ap- proved January 9, 1838), the same inhibition was inserted into the enabling act. Nine years later a like clause was placed in the charter (laws of 1847, page 139) of the Merchants' Mutual Insur- ance Company of Milwaukee. Nor did the legis- lature content itself with refusing the banking privilege to insurance corporations. The Missis- sippi & Lake Erie Navigation Company, headed by William B. Astor, was chartered for freight and passenger transportation with a proviso for- bidding the banking privilege (laws of 1847, page 39); and the Southport & Beloit Road Company and the Milwaukee & Waterford Plank Road Company, established for maintaining plank roads, were incorporated with a similar restrictive clause (laws of 1848, pages 70, 298). But the crowning evidence of legislative antipathy to banks is found in the second earliest charter for church purposes granted in Wisconsin-to the First Congregational Society in the town of Mil- waukee. By this act James Bonnell, Eliphalet Cramer, Samuel Brown, Frederick B. Otis and Abram D. Smith were created a body politic and corporate for the purposes of religion, but nothing

* This was a diminutive wooden building on the west side of Broadway, about the center of the block between Wis- consin and Mason streets. In the spring of 1840 the business was removed to a small one-story frame on Wisconsin street, the second door below the post-office. In the spring of 1842 it was again transferred to where the Newhall house later stood. In 1846, or thereabouts, removal was made to the southeast corner of East Water and Michigan streets, where a building had been erected especially for the company, and where it has remained almost continuously since.

+ An anecdote concerning a life-risk taken by the company is given in Camp's History of Western Banking, page 9.

in the act contained was to be construed as giving the society banking powers : (Laws of 1845, page 85; approved February 22, 1845.)

But despite the prohibition, there were two branches of financiering to which the early and systematic attention of the Wisconsin Marine & Fire Insurance Company was devoted. One was the purchase from the government of farms for worthy, but impecunious, intending settlers. As the United States sternly required payment in advance, the company bought and paid for the farm, placed the incomer in possession, and con- tracted with him to deed to him in the future, upon terms profitable to the company and advantageous to the grantee.

The other and more important branch of the company's business was the issuance of certificates of deposit. These pieces of paper were of the greatest utility, not only in Milwaukee but all over the West. In Detroit, in St. Louis, in Cleveland, in Cincinnati, they were familiar and welcome visitors. They were issued in denominations as small as one dollar; they greatly resembled bank notes; they were paid promptly on demand. In this last characteristic they were almost in a class by themselves, the Chemical of New York being the only bank that could make a similar claim for its like obligations. The quantum of circulation of these certificates of the Wisconsin Marine & Fire Insurance Company greatly fluctuated. On March 1, 1840, the amount outstanding was seven thousand one hundred and forty-five dollars ; on August 31, 1841, seventy-two thousand three hun- dred and thirty-four dollars; on June 1, 1842, forty-four thousand one hundred and sixty-one dollars; on November 1, 1843. one hundred and fifteen thousand six hundred and seventy-three dollars; on May 1, 1844, seventy-two thousand and eighty seven dollars ; on November 1, 1845, two hundred and forty-four thousand nine hun- dred and sixty-seven dollars ; on March 1, 1846, one hundred and twenty-one thousand two hun- dred and forty-seven dollars ; on July 1, 1847, three hundred and three thousand one hundred and ninety-six dollars ; on January 1, 1848, four hundred and five thousand four hundred and ninety-eight dollars ; on July 1, 1849. seven hun- dred and forty-eight thousand and seventy-five dollars; on October 1, 1849, one million forty- one thousand five hundred and thirty-one dollars, (the first time the amount was more than a million

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dollars); on March 1, 1850, three hundred and seventy-three thousand nine hundred and sixty-six dollars ; on February 1, 1851, one million and sixty-three thousand six hundred and ninety-eight dollars, and on May 1, 1852, eight hundred and thirty-seven thousand four hundred and eighty- nine dollars. On December 1, 1852 (the year in which the state banking law was passed), the circu- lation reached its maximum point, one million four hundred and seventy thousand two hundred and thirty-five dollars. Except about thirty-two thou- sand dollars, either lost or preserved by collectors, every dollar of this vast sum was redeemed in coin.

A number of interesting events belongs to these years of uninterrupted solvency :

There were several runs to entrap and destroy the, company. These were organized, not by depositors, but by rival banks in other places. Mr. Mitchell, however, was always ready for the emergency and never called down his flag. An especially cunning scheme was planned in Chicago and Detroit in 1849, at Thanksgiving time. The statement was widely circulated that the Smith Bank in Chicago-Mr. Mitchell's feeder-had closed its doors, and, at the same time with the rumor, all the certificates that could be gathered were poured into Milwaukee for payment. Mr. Mitchell, certain of Mr. Smith's solvency, hurried up coin from Chicago by land and lake. The wagon bearing specie broke down on the way and lumbered laboriously into Milwaukee on three wheels ; but the company cared not for the delay, and both Mr. Mitchell and Mr. Ferguson paid cer- tificates until bed-time out of the local store. The next day it was learned that the Smith Bank had closed in Chicago-on the Thanksgiving holiday.

Another incident of this period was the adoption of a law repealing the company's charter. On January 29, 1846, the governor approved a bill, passed by a large majority, annulling the fran- chise of the Wisconsin Marine & Fire Insurance Company (laws of 1846, page 40). The interested parties paid no attention to the act and the adverse legislation had no effect upon the business. Mr. Smith and Mr. Mitchell being advised by counsel that their charter could not be recalled, and that quo warranto was the proper proceeding against their alleged illegal acts, issued on January 30, 1846, a circular phrased as follows :

The recent act of the legislature of the territory in refer- ence to this institution will not in any way affect its rights or

interrupt its business. This notice is deemed proper for the information and protection of holders of its paper, which will be redeemed by its correspondents in New York, Buffalo, Detroit, Chicago, Galena and St. Louis as heretofore.

The circular was accompanied by a statement in detail of the condition of the company showing surplus over liabilities of two hundred and sev- enty-eight thousand, four hundred and sixty-six dollars and seventy-five cents.

Other attempts were threatened to destroy the company whose legal existence until 1868, the legislature had solemnly decreed. Bills were framed to declare the certificates of deposit of no legal value, and to impose a fine of five dollars for every one taken in and paid out, and steps were threatened in 1852 to test the right of the com- pany to exist. But the bills were never intro- duced, and the legal proceedings were withdrawn upon the understanding that the company would reorganize under the then recently adopted state banking law.

Thus the company had successfully fended off legislative opposition. That such opposition had been so regular and so persistent is matter of surprise, considering the assured standing of the company as a Milwaukee institution and its con- stant essential service to the legislators them- selves. Not infrequently the territorial officers were indebted to Mr. Mitchell for salaries too tardily paid by the United States government; not infrequently appropriations were made reim- bursing him for money advanced in periods of stringency and delay. Hence, it has well been said that in aiming to destroy this company, the legislature was lopping off its own supporting limb. Happily this time of hostility came to an end.

During the entire period under consideration, Mr. Smith and Mr. Mitchell had occupied the posi- tions, respectively, of president and secretary of the company. But the secretary, with the presi- dent's approval, was gradually preparing for the absorption of the entire ownership -an event which occurred with the reorganization of the company in 1853. With the advancement of Mr. Mitchell to the presidency, came the promotion to cashiership of David Ferguson, a friend of Mr. Mitchell from Aberdeenshire, Scotland, who had entered the company's service in 1840, when he was nineteen years of age.

Necessarily this chapter has been devoted almost entirely to the history of but one financial

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HISTORY OF MILWAUKEE.

institution. During most of this early period it had no rival in Milwaukee. In 1847, however, were the beginnings of the present Marshall & Ilsley Bank. Samuel Marshall began a brokerage and private banking business in the spring of that year, which with William J. Bell as a silent part- ner for about twelve months, continued until April 17, 1849. In September, 1849, Mr. Mar- shall, in company with a former clerk of the Wisconsin Marine & Fire Insurance Company named Charles F. Ilsley, opened a general bank- ing office, under the firm name of Marshall & Ilsley, in the old United States Block, now known as No. 342 East Water street. In 1853 they were driven by increase of business to the Furlong Block on the southwest corner of East Water and Huron streets. Carrying on its affairs with rigid honesty and with wise conservatism, this firm grew and prospered. It has staunchly weathered every financial gale and now, in an ever young old age, the corporation founded upon it in 1888 commands universal respect.

Mr. Bell above named after dissolving with Mr. Marshall, formed a partnership with Augustus L. McCrea. The firm of McCrea & Bell, an ex- change and banking house, did a business of not long duration at the corner of East Water and Huron streets.

A somewhat careful search has failed to dis- close any other corporations or firms fairly en- titled to be designated as banks, or bankers in Milwaukee during this early period." Adverse legislation had been practically prohibitive. It remains in this chapter to consider how this hos- tility was averted and an atmosphere favorable to banking created in Wisconsin.

Two constitutions were tendered to the people for acceptance preliminary to statehood. The first Constitutional Convention, in session at Madi- son from October 5, 1846, until December 16, 1846, prepared an instrument, which was submit- ted to the people on the first Tuesday in April, 1847, and rejected. The vote of the counties was fourteen thousand one hundred and nineteen for the proposed constitution, and twenty thousand two hundred and thirty-three against it. The vote of Milwaukee county was one thousand six hun- dred and seventy-eight for, and one thousand

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History of Milwaukee from its first settlement to the year 1895, Part 49

Author: Conard, Howard Louis, ed. cn Publication date: 1895 Publisher: Chicago and New York, American Biographical Publishing Co Number of Pages: 840

Author: Conard, Howard Louis, ed. cn
Publication date: 1895
Publisher: Chicago and New York, American Biographical Publishing Co
Number of Pages: 840