History of Milwaukee from its first settlement to the year 1895, Part 50

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

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nine hundred and ninety-six against. The re- jected instrument contained a clause prohibiting banks of issue and the circulation of any bank notes of less denomination than twenty dollars. It was especially the money clauses that were dis- tasteful to the majority and caused the rejection of the constitution. The second convention as- sem bled at Madison, December 15, 1847, and ad- journed February 1, 1848. The constitution pre- pared by the latter body was accepted by the peo- ple on the second Monday in March, 1848. The vote of all the counties for the constitution was sixteen thousand seven hundred and ninety-nine; against it, six thousand three hundred and eighty- four. The vote of Milwaukee county was two thousand and eight for, and two hundred and three against. The second convention started in to avoid the rocks upon which the instrument of the first had been wrecked. Several mooted questions were thus left to the people for subse- quent legislative decision-banks, for instance. The object of the second convention was to draft a constitution that would be popular, and this could only be done by allowing the people to fight over such questions of policy among themselves .*

In accordance with this plan the provision of the state constitution on the subject of banking, as contained in Article XI., Sections 4, 5, is as follows :

SECTION 4. The legislature shall not have power to create, authorize or incorporate, by any general or special law, any bank or banking power or privilege, or any institu- tion or corporation, having any banking power or privilege whatever, except as provided in this article.

SECTION 5. The legislature may submit to the votera, at any general election, the question of "bank," or "no bank," and if at any such election a number of votes equal to a ma- jority of all the votes cast at such election on that subject shall be in favor of banks, then the legislature shall have power to grant bank charters, or to pass a general banking law, with such restrictions and under such regulations as they may deem expedient and proper for the security of the bill holders. Provided, That no such grant or law shall have any force or effect until the same sball have been submitted to a vote of the electors of the state, at some general election, and been approved by a majority of the votes cast on that subject at such election.

To give force and efficacy to these provisions, the legislature of 1849 adopted a penal chapter (chapter 39) on unauthorized banking,t and the Supreme Court of Wisconsin in several cases de- cided that these sections of the constitution

* A reference to the "wild-cat" bank of Joel W. Hemen- way, stated to have been chartered February 12, 1850, will be found in Buck'a Milwaukee, III., 236.

* XI. Wisconsin Historical Collections, 409.

+ Sections 2021, 2022, R. S., 1878.

265

BANKS AND BANKING.

reserved to the people all legislative power upon the subject of banks and banking. Any act upon the subject not submitted to the people would be void .* The present banking act is therefore essen- tially, pre-eminently and peculiarly, a people's law.

It was not until 1851 that the legislature took any action upon this subject. By this time the state and the city had prospered to an unwonted degree and the intelligence and enterprise of the population were protesting against restrictions upon legitimate financial institutions. Chapter 143 of the laws of 1851 provided that the question of bank or no bank should be submitted to the electors at the ensuing general election, and the result communicated to the next legislature at the commencement of its session.

On November 4, 1851, the question was pre- sented to the people and the decision was largely in favor of banks. The vote of the state was, bank, thirty-one thousand two hundred and eighty- nine; no bank, nine thousand one hundred and twenty-six. The vote of Milwaukee county was, bank, four thousand four hundred and seventy- one; no bank, three hundred and forty-one. As a consequence the legislature of 1852, (chapter 479) adopted a general banking law. This also was submitted to the people at the general elec- tion November 2, 1852, and was accepted. The vote of the state was, for the act, thirty-two thousand eight hundred and twenty-six; against the act, eight thousand seven hundred and eleven. The vote of Milwaukee county was, for the act, four thousand one hundred and seventy-three;

against the act, seventy-three. This act is still the law of the state and is incorporated in chapter XCIV of the Revised Statutes of 1878.

Its terms need not be recapitulated at great length. They are quite like the free banking law . which had been authorized in New York, April 13, 1838. The Wisconsin law permitted any number of persons to organize banking corpora- tions under the restrictions" and in the manner provided therein, and the office of the bank comp- trollert was created as an important part of the law's machinery. "Circulating notes in the simil- itude of bank notes" might be issued by the comptroller for an amount not larger than its capital stock, to any bank which deposited with the state treasurer to secure this circulation an equal amount of state or United States stocks or bonds worth par. Public stocks were in all cases to be, or to be made to be, equal to a stock producing six per cent. per annum. Provision was made for graduating the amount of the circulating medium when stocks below par were tendered to the comptroller, and for refusing entirely any stocks deemed insecure. All banks were to redeem their notes at their counters in coin, and every six months render a detailed statement of their con- dition to the comptroller, who was to see that the banks kept their securities good and that the law was faithfully obeyed.

To discover how the new law operated in Mil- waukee is the province of the next section.

* State ex rel Reedsburgh Bank v. Hastings, 12 Wisconsin, 47; Van Steenwyck v. Sackett, 17 Wisconsin, 645; Brower v. Haight, 18 Wisconsin, 102; Rusk v. Van Nostrand, 21 Wis- consin, 159; Porter v. State, 46 Wisconsin, 375.

* One of the restrictions was that the maximum capital should not exceed five hundred thousand dollars. The appre- bension that banks might become so formidable as to swallow up the state still lingered in the legislative mind.

t This office was abolished in 1870; the stale treasurer per- forms the duties. Laws of 1868, chapter 28.

CHAPTER XXXIX.

THE ERA OF STATE BANKS IN WISCONSIN. BY WILLIAM W. WIGHT AND JOHN JOHNSTON.

I T having been provided that the free banking act should go into effect on the first Monday of November, 1852, if the majority of the ballots cast on that day should approve the law, and the vote having been favorable thereto, the advent of 1853 saw a large crop of banks spring- ing up throughout the state. In the city of Mil- waukee three were organized in 1853, and fifteen from 1853 to the war period. In January, 1853, the Wisconsin Marine & Fire Insurance Com- pany placed itself under the ægis of the law, and ceased longer to be the target of invidious legisla-

tion. To its already unwieldy name the designa- tion bank was now for the first time appended. In common speech, however, Mitchell's Bank was a sufficient appellation.

The following table gives, it is believed, a com- plete list of the banks established under the state law during the period now under consideration. The date of opening, as given in the articles of organization, the original quantum of stock, the name of the first president and of the first cashier and the event of each bank is presented. The list is intended to be chronological:

TABLE OF STATE BANKS ORGANIZED IN MILWAUKEE, 1853-1862.

Name.

When Opened

Original Capital.

First President.

First Cashier.

Event.

Wis. Marine and } Fire Ins. Co ...

Jan. 5, 1853 $100,000 Alexander Mitchell ....

David Ferguson.

With termination "Bank," still in existence.

State Bank of

May 1, 1853

150,000 Eliphalet Cramer ..

Moses S. Scott.

§ Became, March 2, 1865, Mil- waukee National Bank.

Farmers' and}

May 2, 1853

50,000 Newcomb Cleveland .. .

Charles D. Nash

Became, Sep. 19, 1863, First National Bank.

Exchange Bk. of Wm.J. Bell&Co. 5

Nov. 2, 1853

50,000 William J. Bell ..

James B. Kellogg.

Closed July 14, 1855.

Bank of Commerce Apr. 19, 1854

100,000 George W. Peckham ..

Joseph S. Colt.

Closed 1856.

Germania Bank of G. Papen

Ang. 1, 1854

25,000 George Papendiek.

Christopher H. H. Papendiek Failed January, 1855.

diek & Co .....

People's Bank of Haertel, Green- Nov. 1, 1854 leaf and Co ...

Bank of Milwaukee Jan. 1, 1855

50,000 Charles D. Nash

Peveril S. Peake.

§ Became, 1865, National Ex-

Marine Bank. Feb. 1, 1856

50,000 Jacob A. Hoover.

John H. Skidmore.

change Bank. Closed 1860. .

Second Ward Bank Feb. 1, 1856

25,000 Augustus C. Wilmanns William H. Jacobs

§ Became, Feb. 1866, ¿ Second Ward Savings Bk. Closed Jan. 4, 1858.

Globe Bank. June 1, 1857

100,000 Asahel Finch

William R. Freeman

Samuel B. Scott

§ Became, 1866, National City Bank.

Union Bank.

Apr. 23, 1858

50,000 John W. Medbury.

Wilbur F. Herbert

Closed 1859.

Merchants' Bank. . Aug. 1, 1862 Milwaukee) County Bank. S Aug. 1, 1862

25,000 Edwin II. Goodrich.

Samuel B. Scott.

( Became, 1865, Merchants' National Bank.

James L. Spink

Closed 1869.

From none of the concerns listed as closed did any loss accrue to their customers. The bonds deposited by the unfortunate Germania Bank*

were sold by the comptroller, and the proceeds were ample to secure those interested; the other institutions which ceased business previously de- posited with the comptroller sufficient specie to redeem their circulation, and withdrew their bonds. The Globe Bank never fully organized.

* The sad tragedy of the murder, on October 16, 1855, of H. C. Adams, by a Bavarian named Feiner, is one of the many sequels of the failure of the Germania Bank.

266

Closed January 4, 1858.

25,000 Herman Haertel.

Emory B. Greenleaf.

Juneau Bank. July 1, 1857

250,000 James B. Cross

50,000 Jobn Armstrong.

Wisconsin . . . .

Millers' Bank .. §

267

THE ERA OF STATE BANKS IN WISCONSIN.

Of the officers above named Mr. Nash became ment required that such bondsmen should be resi- president of the Bank of Milwaukee and of the Na- dents of the state. The law of 1858 also made more stringent the requirements for semi-annual statements. tional Exchange Bank, and so continued until 1893, and Mr. Ferguson continued cashier of the Wiscon- sin Marine & Fire Insurance Company Bank until the disaster of July, 1893, hereinafter to be men- tioned. With these exceptions all the above named persons have long since ceased, from death or other causes, to be connected with Milwaukee banks.

The free banking act was thoroughly tested during the ten years following its passage, and its merits and demerits brought to light. Its espec- ially vulnerable point was the facility with which banks could be established, not for the purposes of legitimate business, but solely to become tem- porary centers of issuance of profitable, and usually irredeemable, circulation. This result was frequently accomplished by locating the alleged bank at some obscure point, in some swamp or glen ; in some quiet nook in the great and inac- cessible Northwestern forests, in some other out- of-the-way place where no holders of notes could appear to present them or notary to protest them." One keen financier, still living, adopted another profitable device-he named his note-shop the Bank of Green Bay, to which place the holder of paper would naturally turn to obtain specie there- for, but the institution's local habitation was La Crosse. Such banks, whose homes were frequently migratory, sylvan and uncertain, were denomi- nated "wild-cat."+

To remedy the evils which experience had dis- covered in the statute, an omnibus amendment was passed in 1858 (chapter 98), which was ratified by the people at the ensuing November election .; By the amending act the comptroller was forbid- den to issue notes for circulation except to banks doing a regular discount, deposit and exchange business " in some particular city or village in a township containing not less than two hundred votes." As the law of 1852 required that bonds to the amount of one fourth the bills to be issued should be given by the directors and stockholders as additional security for circulation, the amend-

* See Johnston's An Address on the Currency, p. 24.

+ This name was borrowed from the panther printed upon the notes of the notoriously unsound state banks of Michigan. The vote of the state stood : For the amendments, twenty-seven thousand two hundred and sixty five; against them, two thousand eight hundred and thirty-seven. The vote of Milwaukee county was: For the amendments, one thou- sand nine hundred and ninety-two; against them, thirty-three.

As thus improved the law was certainly salu- tary. The panic of 1857 and the contraction " which followed hard upon," caused no appreci- able loss to depositors and note-holders, for the statute carefully shielded them. But no law- maker had been so sagacious as to foresee, and provide against, the War of the Rebellion and its fateful consequences.

Under the banking act, it will be remembered, the circulation of banks was to be secured by the deposit, with the treasurer, of reputable stocks or bonds of states. Many banks, although not largely in Milwaukee, held these obligations of Southern common wealths-those being the cheapest six per cent. bonds then on the market. The agitations following the election of Abraham Lincoln to the presidency in 1860, caused a serious decline in the value of these securities-a decline in which the obligations of Northern states somewhat sympa- thized. When, in 1861, from Fort Sumter was "fired the shot heard round the world," the climax of depreciation had been reached, for the obligations of the Southern and border states had become practically worthless.

Many " wild-cat " concerns in Wisconsin found ample excuse in the prevailing distraction for the absolute repudiation of their notes; the comp- troller was unable, by the customary demands on banks in default, to bolster up their circulation, and the financial interests of the state were im- minently jeopardized by the enforced closing of such banks and by the consequent sale at ruinously low figures, of the securities they had deposited to protect their floating paper. The situation was critical beyond expression, but as the holdings of Southern securities in Milwaukee were not large, the trouble in the city was but reflex. The notes of many banks of the "wild-cat" order had gravitated thither, and the quantity of uncurrent paper in vaults and tills was becoming a matter of serious import.

The legislature of Wisconsin was in session and in extra session in the spring of 1861, and did its utmost to avert the overshadowing ruin. To sus- spend specie payments seemed the heroic remedy; but as the banking act could not be amended except by the people at a general election-

268

HISTORY OF MILWAUKEE.

which was not due until November-this remedy could only be applied by indirection. Chapter 242 (as amended by chapter 1 extra session) and chapter 308 of the laws of 1861, endeavored to accomplish this result." The former of these made still more stringent and efficacious the orig- inal law, providing as it did, among other things, that all banks and banking associations should honor their issues either at Milwaukee or at Madi- son, and that no public stocks should be received as security for circulation, except those of Wiscon- sin and of the United States. Chapter 308 sus- pended until December 1, 1861, all action under section 23 of the banking act (R. S., 1878, page 1222, section 23, which required the comptroller to proceed against banks failing to redeem their circulation), forbade until the same date all nota- ries to protest bank bills or notes, and gave any bank sued on its paper until the same date to answer the complaint.

This latter act was approved April 17, 1861. However pleasant, therefore, might be the pros- pects of all financial institutions after the ap- proaching December, for the intervening seven months or more, there would be no specie re- demption and every person must be a law unto himself as to the value of paper on the street. The banks in Milwaukee, as doubtless in other cities, threw out the bills of those concerns which refused to redeem their paper or whose solvency was discredited by reason of their circu- lation being secured only by depreciated obliga- tions, while store-keepers deposited several times during a day in order to work off their suspected and suspicious notes. Early in April, 1861, there were one hundred and ten banks of good repute in the state, but when the Bankers' Convention met in the Newhall House, Milwaukee, on April 25, 1861, a score or more of these were under a shadow. The object of this convention was to tranquilize the financial situation, revive paralyzed trade, allay public apprehension and especially to devise measures to make good the currency of the state. A circular dated April 26, 1861, and signed by fifty-five of the leading institutions of the

state (and by all the banks in Milwaukee except the Farmers' & Millers') contained the names of seventy banks whose issues were to be received and paid as current. The phraseology of this circular, which in fact was a substantial guarantee, was as follows :

The undersigned banks and bankers of the State of Wis- consin believing the following named banks to be sound, and well secured, either by state stocks or individual responsi- bility, or both, do hereby agree to continue to receive and pay out their issues until the first day of December next, when the amended banking law will go into effect.

Another circular of the same date, signed by the same fifty-five persons and by the president of the Farmers' and Millers' bank, contained an agreement not to "assort any of the currency of this state received by us from this date until after the 1st day of December next." Circulars so gen- erally signed and by men of undoubted responsi- bility, had a soothing effect, and for some weeks there was apparently an improved face upon affairs. But peace did not long continue. Besides certain country banks, the Farmers'& Millers' Bank of Milwaukee had declined to sign the guaranteeing circular and had refused to abide by its terms, be- lieving its issue unbusinesslike and impolitic, and unfair to absent stockholders; the discrimination intended by it impracticable, and that the effect of it would be to foist upon the public an unconver- tible currency. Nor was this opinion without reason. It was soon discovered that some of the country banks that had signed the circulars were assorting bills of some of the seventy banks whose circulation they had virtually guaranteed-they were paying the notes they considered poor and saving the others. Large note-receivers, like rail- roads, were making their Milwaukee deposits of the least merchantable bills that the circular- signers had agreed to protect. At this time the Milwaukee banks and private bankers, with an ag- gregate capital of about eighteen hundred and twenty-five thousand dollars, had a currency issue of less than sixty-six thousand dollars. It can readily be seen, therefore, that notes so well secured never came home, and that the Milwaukee banks and business men were driven to do business with the currency from the country. Moreover, it was springtime and the Milwaukee banks, as usual, were rapidly filling with deposits, which were made up mainly of very shady bills. All the doubtful currency was gravitating toward Mil- waukee in a steady stream, and it was very evi-

* The vole at the election November 5, 1861, whether chapter 242 should go into effect was as follows: In the whole state for the amendment, fifty-seven thousand six hundred and forty-six; against it, two thousand five hundred and fifleen. In Milwaukee county: For the amendment, two thousand six hundred and ninety-three; against it, four hundred and two.

THE ERA OF STATE BANKS IN WISCONSIN.

269

dent that long before December 1, 1861, the city vaults would hold all the poor notes of the state, and that those who had become guarantors from choice in April would become new guarantors from necessity in December, or stand the loss arising from their uncurrent holdings.

In this dilemma, certain of the Milwaukee bankers, hearing that certain of the country guar- antors had actually refused guaranteed paper, met on the evening of June 21, 1861 (being Friday), and formulated a notice to their dealers in the language of the following card :

MILWAUKEE, June 22, 1861.

Owing to the action of the railroad companies of the state and some country bankers in throwing out the following list of banks-Northern Bank, Dodge Counly Bank, Wisconsin Pin- ery Bank, City Bank of Kenosha, Bank of Green Bay, Bank of Columbus, Bank of Portage, Waupun Bank, E. R. Hinkley & Co.'s Bank of Grant County, La Crosse County Bank-the undersigned banks and bankers of this city are under the neces- sity of saying to their dealers that on and after this date, and till further notice, they can only receive the notes of the above list of banks on special deposit. We would also state that there is now an arrangement on foot, and likely to be consum- mated, by which the Southern securities of the banks now current and deposited with the comptroller will be disposed of and replaced by our own state bonds, thus placing upon a sound basis the whole circulation of the current list of banks. On this being carried out, and we know no sound reason why it cannot be, the benefit to all the business interests of our state will be incalculable and felt by every citizen.

*ANDREW MITCHELL, Pres. Wis. Mar. & Fire Ins. Co.

M. S. ScoTT, Cash. State Bank of Wis.

C. D. NASH, President Bank of Milwaukee.

E. D. HOLTON, President Farmers' & Millers' Bank.

S. B. SCOTT, Cashier Juneau Bank.

PRICE, FARMER & Co.

MARSHALL & ILSLEY.

This was a new sifting of the grain, a new skimming of the cream, not at all relished by laborers who, receiving their weekly wage on Saturday, saw by examining this card in the after- noon papers of that day that their stipends were largely made up of notes of these ten discredited banks. Moreover, these men more than hinted that some of these very notes had been paid out by some of these banks on that very Saturday, after the signing, but before the publication of the card. Immediately trouble was brewing in the outskirts of the city ; the storm gathered momentum during the Sunday interim. . News that a riot was threatened by Germans in the outer wards was brought to the mayor and to the banks whose officers had signed the offending card. But

even down to the very hour when the tempest broke the persons most immediately interested doubted its very existence, and the banks marked for plunder and sacking made no preparation for resistance. This apathy was not justified by any silence or secrecy on the part of the agitators. All of Sunday, June 23, charges of bad faith were loudly and openly made against the banks and bankers by the workmen who, having already suf- fered grievously by the prevailing depression, were in a lowering and tempestuous mood. They argued in public. harangues to their sympathizers : " If the bills of these ten banks are discredited to-day, others will be discredited to-morrow ; what we receive as good to-day we cannot pay out as good to-morrow. Finally, all our money will be bad." They reasoned pertinently, but in resorting to riot and destruction to remedy their evils their wrongheadness brought their righteous cause into ill-repute.

On Monday morning June 24, workmen, appar- ently a poor class of Germans, to the number of not less than two hundred, whose unlawful pur- pose requires them to be designated a mob, assembled about nine o'clock on a signal call at the corner of Winnebago and Ninth streets. Forming in procession they garnished their ranks with a band of music and with a flag which con- tained in German a threat of disaster to the banks. Growing in strength and increasing in vehemence as they descended Chestnut street, they halted first at the Second Ward Bank, then situ- ated at No. 10 Chestnut street. Appeased by the promises and demeanor of the president, Mr. Wil- liam H. Jacobs, the throng with greatly augmented numbers proceeded toward the heart of the city, marching by way of Market square and East Water street, and cheering the Farmers' and Millers' Bank as they passed by Wisconsin street.

Admonished of the danger the banks had vaulted their valuables and barricaded their doors, and it is reported that the Juneau Bank had armed and was ready for a vigorous fray. The fury of the mob was first directed against Mitchell's Bank, situated then as now on the southeast corner of Michigan and East Water streets. The doors were vehemently assaulted but did not yield. The mayor, James S. Brown, supported by the sheriff, Charles H. Larkin, attempted to appease the riot from the bank steps-he might as well have tried to call down the wind. A missile struck him upon

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History of Milwaukee from its first settlement to the year 1895, Part 50

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