USA > Wisconsin > Jefferson County > The history of Jefferson county, Wisconsin, containing biographical sketches > Part 29
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The great source of loss and weakness at that time was found in the rapid decline of the market value of the securities deposited to protect circulation, which were mostly state bonds, and largely those of the southern states; so that this security, when it came to be tried, did not prove entirely sufficient. Another fault of the system, or of the practice under it, was developed at this time. It was found that many of the banks had been set up without actual working capi- tal, merely for the purpose of issuing circulating notes, and were located at distant and inaccessible points in what was then the great northern wilderness of the state; so that it was expensive and in fact impracticable to present their issues for redemption. While these evils and their rem- edies were a good deal discussed among bankers, the losses and inconveniences to the people were not yet great enough to lead to the adoption of thorough and complete measures of reform. The effect of these difficulties, however, was to bring the bankers of the state into the habit of consulting and acting together in cases of emergency, the first bankers' convention having been held in 1857. This was followed by others from time to time, and it would be difficult to over- value the great good that has resulted, at several important crises from the har. onious and con- servative action of the bankers of our state. Partly, at least, upon their recommendations the legislature, in 1858, adopted amendments to the banking law, providing that no bank should be located in a township containing less than two hundred inhabitants; and that the comptroller should not issue circulating notes, except to banks doing a regular discount deposit and exchange business in some inhabited town, village, city, or where the ordinary business of inhabited towns, villages and cities was carried on. These amendments were approved by the people at the fall
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election of that year.
Banking matters now ran along pretty smoothly until the election in 1860, of the republican presidential ticket, and the consequent agitation in the southern states threatening civil war, the effects of which were speedily felt; first, in the great depreciation of the bonds of the southern states, and then in a less decline in those of the northern states. At this time (taking the state- ment of July, 1860,) the number of banks was 104, with aggregate capital, $6,547,000; circula- tion, $4,075,918; deposits, $3,230,252.
During the winter following, there was a great deal of uneasiness in regard to our state cur- rency, and co ,tinuous demand upon our banks for the redemption of their circulating notes in coin. Many banks of the wild-cat sort failed to redeem their notes, which became depreciated and uncurrent ; and, when the rebellion came to a head by the firing on Fort Sumter, the banking interests of the state were threatened with destruction by compulsory winding up and enforced sale at the panic prices then prevailing, of the securities deposited to secure circulation. Under these circumstances, on the 17th of April, 1861, the legislature passed " an act to protect the holders of the circulating notes of the authorized banks of the state of Wisconsin." As the banking law could not be amended except by approval of the electors, by vote at a general election, a practical suspension of specie payment had to be effected by indirect methods. So this act first directed the bank comptroller to suspend all action toward banks for failing to redeem their circulation. Secondly, it prohibited notaries public from protesting bills of banks until Dec 1, 1861. Thirdly. it gave banks until that date to answer complaints in any proceed- ing to compel specie payment of circulating notes. This same legislature also amended the banking law, to cure defects that had been developed in it. These amendments were intended to facilitate the presentation and protest of circulating notes, and the winding up of banks failing to redeem them, and provided that the bank comptroller should not issue circulating notes except to banks having actual cash capital ; on which point he was to take evidence in all cases ; that after Dec. 1, 1861, all banks of the state should redeem their issues either at Madison or Milwaukee, and no bonds or stocks should be received as security for circulation except those of the United States and of the state of Wisconsin.
Specie payment of bank bills was then practically suspended, in our state, from April 17 to December 1, 1861, and there was no longer any plain practical test for determining which were good, and which not. In this condition of things, bankers met in convention, and, after discus- sion and inquiry as to the condition and resources of the different banks, put forth a list of those whose issues were to be considered current and bankable. But things grew worse, and it was evident that the list contained banks that would never be able to redeem their circulation, and the issues of such were from time to time thrown out and discredited without any concert of action, so that the uneasiness of people in regard to the financial situation was greatly increased. The bankers finally met, gave the banks another sifting, and put forth a list of seventy bank>, whose circulating notes they pledged themselves to receive, and pay ont as current, until Decem- ber 1. There had been so many changes that this pledge was thought necessary to allay the apprehensions of the public. But matters still grew worse instead of better. Some of the banks in the "current" list closed their doors to their depositors, and others were evidently unsound, and their circulation so insufficiently secured as to make it certain that it would never be redeemed. There was more or less sorting of the currency, both by banks and business men, all over the state, in the endeavor to keep the best and pay out the poorest. In this state of things, some of the Milwaukee banks, without concert of action, and acting under the apprehen- sion of being loaded up with the very worst of the currency, which, it was feared, the country banks and merchants were sorting out and sending to Milwaukee, revised the list again, and
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threw out ten of the seventy banks whose issues it had been agreed should be received as current. Other banks and bankers were compelled to take the same course to protect them- selves. The consequence was a great disturbance of the public mind, and violent charges of bad faith on the part of the banks, which culminated in the bank riots of June 24, 1861. On that day, a crowd of several hundred disorderly people, starting out most probably only with the idea of making some sort of demonstration of their dissatisfaction with the action of the banks and bankers and with the failure to keep faith with the public, marched through the streets with a band of music, and brought up at the corner of Michigan and East Water streets.
The banks had just sufficient notice of these proceedings to enable them to lock up their money and valuables in their vaults, before the storm broke upon them. The mob halted at the place above mentioned, and for a time contented themselves with hooting, and showed no dispo- sition to proceed to violence; but, after a little while, a stone was thrown through the windows of the Wisconsin Marine and Fire Insurance Company's Bank, situated at one corner of the above streets, and volleys of stones soon followed, not only against that bank, but also against the State Bank of Wisconsin, situated on the opposite corner. The windows of both these institutions and of the offices in the basements under them were effectually demolished. The mob then made a rush into these banks and offices, and completely gutted them, offering more or less violence to the inmates, though no person was seriously hurt. The broken furni- ture of the offices under the State Bank of Wisconsin was piled up, and the torch was applied by some of the rioters, while others were busy in endeavoring to break into the safes of the offices and the vaults of the banks. The debris of the furniture in the office of the Wisconsin Marine and Fire Insurance Company's Bank, was also set on fire, and it was plain that if the mob was not immediately checked, the city would be given up to conflagration and pillage-the worst elements, as is always the case with mobs, having assumed the leadership. Just at that juncture, the Milwaukee zouaves, a small military company, appeared on the scene, and with the help of the firemen who had been called out, the mob was put to flight, and the incipient fire was extin- guished.
The damage so far done was not great in amount, and the danger for the moment was over ; but the situation was still grave, as the city was full of threats, disturbance and apprehension. By the prompt action of the authorities, a number of companies of volunteers were brought from different places in the state, order was preserved, and, after muttering for three or four days, the storm died away. The effect of that disturbance and alarm was, however, to bring home to the bankers and business men the conviction that effectual measures must be taken to settle our state currency matters on a sound and permanent basis, and that the issues of all banks that could not be put in shape to meet specie payment in December, must be retired from circulation and be got out of the way. A meeting of the bankers was held; also of the merchants' association of Milwaukee, and arrangements were made to raise $100,000, by these two bodies, to be used in assisting weak and crippled banks in securing or retiring their circulation. The bankers appointed a committee to take the matter in charge.
It happened that just at this time Governor Randall and State Treasurer Hastings returned from New York City, where they had been making unsuccessful efforts to dispose of $800,000 of Wisconsin war bonds, which had been issued to raise funds to fit out Wisconsin volunteers.
Our state had never had any bonds on the eastern market. For other reasons, our credit was not high in New York, and it had been found impossible to dispose of these bonds for over sixty cents on the dollar. The state officers conferred with the bankers to see what could be done at home ; and it was finally arranged that the bankers' committee should undertake to get the state banks to dispose of their southern and other depreciated state bonds on deposit to
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secure circulation, for what they would bring in coin, in New York, and replace these bonds with those of our own state,. which were to be taken by our banks nominally at par - seventy per cent. being paid in cash, and the different banks purchasing bonds, giving their individual obligation for the thirty per cent. balance, to be paid in semi-annual installments, with an agreement that the state should deduct these installments from the interest so long as these bonds should remain 0:1 deposit with the state. By the terms of the law, sixty per cent. of the proceeds of the bonds had to be paid in coin. The bankers' committee went to work, and with some labor and difficulty induced most of the banks to sell their southern securities at the existing low prices in New York, and thus produce the coin required to pay for our state bonds. From the funds provided by the merchants and bankers, they assisted many of the weaker banks to make good their securities with the banking department of the state. By the 19th of July, six of the ten rejected banks that had been the occasion of the riot, were made good, and restored to the list. The other four were wound up, and their issues redeemed at par, and, before the last of August, the value of the securities of all the banks on the current list were brought up to their circulation, as shown by the comptroller's report.
Wisconsin currency at the time of the bank riot was at a discount of about 15 per cent., as compared with gold or New York exchange. At the middle of July the discount was 10 to 12 per cent., and early in August it fell to 5 per cent. The bankers' committee continued their work in preparation for the resumption of specie payment on December 1. While the securities for the bank circulation had been made good, it was, nevertheless, evident that many of the banks on the current list would not be equal to the continued redemption of their bills in specie, and that they would have to be wound up and got out of the way in season. Authority was got from such institutions, as fast as possible, for the bankers' committee to retire their circulation and sell their securities. The Milwaukee banks and bankers took upon themselves the great burden of this business, having arranged among themselves to sort out and withhold from cir- culation the bills of these banks,-distributing the load among themselves in certain defined proportions. Instead of paying out these doubted bills, the different banks brought to the bank- ers' committee such amounts as they accumulated from time to time, and received from the committee certificates of deposit bearing seven per cent. interest, and these bills were locked up by the committee until the securities for these notes could be sold and the proceeds realized. Over $400,000 of this sort of paper was locked up by the committee at one time; but it was all converted into cash, and, when the first of December came, the remaining banks of this state were ready to redeem their issues in gold or its equivalent, and so continued to redeem until the issue of the legal-tender notes and the general suspension of specie payment in the United States.
In July, 1861, the number of our banks was 107, with capital, $4,607,000; circulation, $2,317,907 ; deposits, $3,265,069.
By the contraction incident to the preparations for redemption in specie, the amount of cur- rent Wisconsin bank notes outstanding December 1, 186t, was reduced to about $1,500,000, When that day came, there was quite a disposition manifested to convert Wisconsin currency into coin, and a sharp financial pinch was felt for a few days; but as the public became satisfied that the banks were prepared to meet the demand, the call for redemption rapidly fell off, and the banks soon began to expand their circulation, which was now current and in good demand all through the northwestern states. The amount saved to all the interests of our state, by this successful effort to save our banking system from destruction, is beyond computation. From this time our banks ran along quietly until prohibitory taxation by act of congress drove the bills of state banks out of circulation.
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BANKING IN WISCONSIN.
The national banking law was passed in 1863, and a few banks were soon organized under it in different parts of the country. The first in Wisconsin was formed by the re-organization of the Farmers' and Millers' Bank, in August, 1863, as the First National Bank of Milwaukee, with Edward D. Holton as president, and H. H. Camp, cashier. The growth of the new system, however, was not very rapid; the state banks were slow to avail themselves of the privileges of the national banking act, and the central authorities concluded to compel them to come in; so facilities were offered for their re-organization as national banks, and then a tax of ten per cent .. was laid upon the issues of the state banks. This tax was imposed by act of March, 1865, and at once caused a commotion in our state. In July, 1864, the number of Wisconsin state banks was sixty-six, with capital $3,147,000, circulation $2,461,728, deposits $5,483,205, and these figures were probably not very different in the spring of 1865. The securities for the circulating notes were in great part the bonds of our own state, which, while known by our own people to be good beyond question, had never been on the general markets of the country so as to be cur- rently known there; and it was feared that in the hurried retirement of our circulation these bonds would be sacrificed, the currency depreciated, and great loss brought upon our banks and people. There was some excitement, and a general call for the redemption of our state circula- tion, but the banks mostly met the run well, and our people were disposed to stand by our own state bonds.
In April, 1861, the legislature passed laws, calling in the mortgage loans of the school fund, and directing its investment in these securities. The state treasurer was required to receive Wisconsin bank notes, not only for taxes and debts due the state, but also on deposit, and to issue certificates for such deposits bearing seven per cent. interest. By these and like means the threatened panic was stopped; and in the course of a few months Wisconsin state currency was nearly all withdrawn from circulation. In July, 1865, the number of state banks was twenty-six, with capital $1,087,000, circulation $192,323, deposits $2,284,210. Under the pressure put on by congress, the organization of national banks, and especially the re-organiza- tion of state banks, under the national system, was proceeding rapidly, and in a short time nearly every town in our own state of much size or importance was provided with one or more of these institutions.
In the great panic of 1873, all the Wisconsin banks, both state and national (in common with those of the whole country), were severely tried; but the failures were few and unimpor- tant; and Wisconsin went through that ordeal with less loss and disturbance than almost any other state.
We have seen that the history of banking in Wisconsin covers a stormy period, in which great disturbances and panics have occurred at intervals of a few years. It is to be hoped that a more peaceful epoch will succeed, but permanent quiet and prosperity can not rationally be expected in the present unsettled condition of our currency, nor until we have gone through the temporary stringency incidental to the resumption of specie payment.
According to the last report of the comptroller of the currency, the number of national banks in Wisconsin in November, 1876, was forty, with capital $3,400,000, deposits $7, 145,360g circulation $2,072,869.
At this time (July. 1877) the number of state banks is twenty-six, with capital $1,288,2318 deposits $6,662,973. Their circulation is, of course, merely nominal, though there is no legal obstacle to their issuing circulating notes, except the tax imposed by congress.
COMMERCE AND MANUFACTURES.
By HON. H. H. GILES.
The material philosophy of a people has to do with the practical and useful. It sees in iron, coal, cotton, wool, grain and the trees of the forest, the elements of personal comfort and sources of material greatness, and is applied to their development, production and fabrication for purposes of exchange, interchange and sale. The early immigrants to Wisconsin territory found a land teeming with unsurpassed natural advantages ; prairies, timber, water and minerals, invit- ing the farmer, miner and lumberman, to come and build houses, furnaces, mills and factories. The first settlers were a food-producing people. The prairies and openings were ready for the plow. The ease with which farms were brought under cultivation, readily enabled the pioneer to supply the food necessary for himself and family, while a surplus was often produced in a few months. The hardships so often encountered in the settlement of a new country, where forests must be felled and stumps removed to prepare the soil for tillage, were scarcely known, or greatly mitigated.
During the decade from 1835 to 1845, so great were the demands for the products of the soil, created by the tide of emigration, that the settlers found a home market for all their surplus products, and so easily were crops grown that, within a very brief time after the first emigration, but little was required from abroad. The commerce of the country was carried on by the exchange of products. The settlers (they could scarcely be called farmers) would exchange their wheat, corn, oats and pork for the goods, wares and fabrics of the village merchant. It was an age of barter; but they looked at the capabilities of the land they had come to possess, and, with firm faith, saw bright promises of better days in the building up of a great state.
It is not designed to trace with minuteness the history of Wisconsin through the growth of its commercial and manufacturing interests. To do it justice would require a volume. The aim of this article will be to present a concise view of its present status. Allusion will only be incidentally made to stages of growth and progress by which it has been reached.
Few states in the Union possess within their borders so many, and in such abundance, elements that contribute to the material prosperity of a people. Its soil of unsurpassed fertility ; its inexhaustible mines of lead, copper, zinc and iron; its almost boundless forests ; its water-powers, sufficient to drive the machinery of the world ; its long lines of lake shore on two sides, and the "Father of waters " on another, -need but enterprise, energy and capital to utilize them in building an empire of wealth, where the hum of varied industries shall be heard in the music of the sickle, the loom and the anvil.
The growth of manufacturing industries was slow during the first twenty-five years of our history. The early settlers were poor. Frequently the land they tilled was pledged to obtain means to pay for it. Capitalists obtained from twenty to thirty per cent. per annum for the use of their money. Indeed, it was the rule, under the free-trade ideas of the money-lenders for them to play the Shylock. While investments in bonds and mortgages were so profitable, few were ready to improve the natural advantages the country presented for building factories and work-shops.
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For many years, quite all the implements used in farming were brought from outside the state. While this is the case at present to some extent with the more cumbersome farm machinery, quite a proportion of that and most of the simpler and lighter implements are made at home, while much farm machinery is now manufactured for export to other states.
FURS.
The northwest was visited and explored by French voyageurs and missionaries from Canada at an early day. The object of the former was trading and gain. The Jesuits, ever zealous in the propagation of their religion, went forth into the unknown wilderness to convert the natives to their faith. As early as 1624, they were operating about Lake Huron and Mackinaw. Father Menard. it is related, was with the Indians on Lake Superior as early as 1661. The early explorers were of two classes, and were stimulated by two widely different motives -the voyag- eurs, by the love of gain, and the missionaries, by their zeal in the propagation of their faith. Previous to 1679, a considerable trade in furs had sprung up with Indian tribes in the vicinity of Mackinaw and the northern part of "Ouisconsin." In that year more than two hundred canoes, laden with furs, passed Mackinaw, bound for Montreal. The whole commerce of this vast region then traversed, was carried on with birch-bark canoes. The French used them in traversing wilds - otherwise inaccessible by reason of floods of water at one season, and ice and snow at another - also lakes and morasses which interrupted land journeys, and rapids and cataracts that cut off communication by water. This little vessel enabled them to overcome all difficulties. Being buoyant, it rode the waves, although heavily freighted, and, of light draft, it permitted the traversing of small streams. Its weight was so light that it could be easily carried from one stream to another, and around rapids and other obstructions. With this little vessel, the fur trade of the northwest was carried on, as well as the interior of a vast continent explored. Under the stimulus of commercial enterprise, the French traders penetrated the recesses of the immense forests whose streams were the home of the beaver, the otter and the mink, and in whose depths were found the martin, sable, ermine, and other fur-bearing animals. A vast trade in furs sprung up, and was carried on by different agents, under authority of the French government.
When the military possession of the northwestern domain passed from the government of France to that of Great Britain in 1760, the relationship of the fur trade to the government changed. The government of France had controlled the traffic, and made it a means of strength- ening its hold upon the country it possessed. The policy of Great Britain was, to charter companies, and grant them exclusive privileges. The Hudson bay company had grown rich and powerful between 1670 and 1760. Its success had excited the cupidity of capitalists, and rival organizations were formed. The business of the company had been done at their trading-stations -the natives bringing in their furs for exchange and barter. Other companies sent their voyageurs into every nook and corner to traffic with the trappers, and even to catch the fur-bear- ing animals themselves. In the progress of time, private parties engaged in trapping and dealing in furs, and, under the competition created, the business became less profitable. In 1815. congress passed an act prohibiting foreigners from dealing in furs in the United States, or any of its territories. This action was obtained through the influence of John Jacob Astor. Mr. Astor organized the American fur company in 18c9, and afterward, in connection with the North- west company, bought out the Mackinaw company, and the two were merged in the Southwest company. The association was suspended by the war of 1812. The American re-entered the field in 1816. The fur trade is still an important branch of traffic in the northern part of the state, and, during eight months of the year, employs a large number of men.
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