Old Wild Cat Times

Among the many and varied relies in the possession of the pioneer society of Washtenaw county, is the financial freaks known as "wildcat money." The earlier effort for the establishment of a bank within the present limits of the state of Michigan was in 1805. The act of congress, which established the terntory of Michigan, conferred legislative powers on the governor and judges, and at their first session as a board, a petition for an act incorporating a bank was presented to them. At this time there was no demand for local banks, for the territory was comparatively a wilderness, the small town of Detroit had just been laid in ashes, while the country was niainly in the hands of the Indians. There were no manufactories, no railroads, no farming interests, no roads in the interior, even, while ships liad scarcely begun to ply along the shores of the lakes and rivers. In general commerce the fur trade was the principal traffic. And tlms the petition for a bank charter was presented, not by citi.ens of Detroit, but by capitalists of Boston, who were engaged in the fur trade. This petition was granted September 15, 1806, incorporating the Bank of troit, with a capital of 400,000. The great distance and limited facilities for communication gave these capitalists the advantage of circulating inland bilis of credit against their western banks for a long time before their redemption. Judge Woodward, one of the judges who granted the act of incorporation, was appointed its president, but the bank was soon disapproved by congress, and in 1809 the bilis were quietly withdrawn trom circulation. The next bank established in the territory was the bank of Michigan, incorporated by the governor and judges December 19, 1817, with a capital of L100,000. The validity of this act was fully established by the courts in 1830. By the terms of the charter, the incorporation was to expire on the first Monday in June, 1839; but the legislativecouncil, February 25, 1831, extended its life 25 years longer, and subsequently it was allowed to increase its capital stock and establish a branch at Bronson, now Kalamazoo. The two banks above named were all the banks which derived their corporate existence from the governor and judges. The first bank charter granted by the legislative council was the Merchants' and Mechanics' bank of Michigan, approved April 2, 1827. The bank was to be established at Detroit, with a capital of $200,000, with liberty to increase it to S500,000. This Corporation was also made an insurance company, but there are no records that such a company was ever organized under this charter. March 29, 1827, the bank of Monroe was incorporated, its capital stock to be $100,000 to $500,000, and to continue in existence twenty years. The Farmers' and Mechanics' bank of Michigan was chartered November 5, 1829, and March 7, 1834, it was allowed to increase its capital stock and establish a branch at St. Joseph. The bank of River Raisin was chartered June 29, 1832, and allowed to have a branch at Pontiac. The bank of Wisconsin was chartered January 23, 1835, and was to be located in the Green Bay country, but on the organization of the state of Michigan it was thrown outside of its jurisdiction. March 26, 1835, tbere were incorporated four banks, namely: Michigan state bank at Detroit, bank of Washtenaw at Ann Arbor, bank of Pontiac, and the Erie and Kalamazoo railroad bank at Adrián. The bank of Pontiac was also a railroad bank, its establishment being an amendment to the charter of the Detroit and Pontiac railroad company. The nine banks last named are all that were created by the legislative councll. Next, the state legislature in 1836 chartered the bank of Manhattan, Calhoun county bank, bank of St. Clair, bank of Clinton, bank of Ypsilanti, bank of Macomb, bank of Tecumseh, and bank of Constantine. The same legislature passed "an act to créate a fund tor the benefit of the creditors of certain moneyed corporations," which was in fact the famous safety fund system of the state of New York. It required each bank to deposit with the state treasurer, at the beginning of each year, a sum equal to onehalf of one per cent on the capital stock paid in, and the fund so created was to be held and used for the benefit of the creditors whenever any bank subject to its provisions should become insolvent. But this statute was destined to have but little practical effect. The system in New York proved inadequate for the security of the public interests, and it was practically abandoned in Michigan. By this time the financial affairs of the whole country had become greatly disturbed in consequence of wild and reckless speculation. The currency became greatiy inflated, fabulous prices given for property, and the masses of the people subjected to the cruel mercies of shrewd financiers. The legislative session of 1837 was flooded with petitions for the creation of banks, and the legislature met the emergency by adopting a system of free banking, under which wcre organized a great number of those institutions known as "wild-cat banks." The statute authorized any twelve freeholders of any county who desired todo banking, to apply to the treasurer and clerk of the county for that purpose, and books were to be opened for subscriptions to the capital stock, 50,000 to $300,000. Ten per cent on each share was required to be paid in specie at the time of subscribing and thirty per cent of the entire capital stock in the funds 1 fore the association should commence operations. The president and directors were also required to furnish securities for the payment of all debts and the redemption of all notes issued by the association. Th is new law was received with great enthusiasm. On its final passage in the house, only fourmembers were bold enough to vote against it, namely: Alma of Kent, Monfore of Macomb, Purdy of Washtenaw and Felch of Monroe. This legislature closed its session March 22, 1837, by adjournment to November 9 following, but the financial embarrassments of the country increased so rapidly that the governor (Steven T. Mason) called an extra session for June 12, 1837, and in nis message he attributed these embarrassments, in a great measure, to the error of overbanking, overtrading and a want of providence and economy. The banks east and south had already suspended specie payments, and Michigan was of necessity drawn into the current. A special commissioner was appointed by the governor to examine the affairs of the banks. His report to this special legislature heldforth, however, that the banks of Michigan were solvent, but that a little time ought to be granted them as a defense against the suspension of banks in New York and elsewhere. The number of banks doing business in Michigan at that time was the unlucky number of 13. The legislature granted them time until May 16, 1838. The legislature the winter following undertook to secure the public by appointing three bank commissioners to visit all the banks in the state at least once in every three months; to examine the specie held by them, inspect their books and inform themselves generally of their affairs and transactions. Monthly statements of the condition of the banks were required to be made and published, and no bilis were to be issued without bearing the indorsement of the bank commissioner. Under the general banking Iaw, as already stated, every subscriber to the stock was to pay 10 per cent in specie on each share at the time of subscribing, and 10 per cent every six months thereafter, and 30 per cent of the whole capital stock was required to be paid in in lice manner before the bank should coramenee operation. The specie thus paid in was to be the capital of the bank, and the basis of its business operations. It was held that banking could not be carried on without bona fide capital, and without it no bank would be permitted to flood the country with its bilis. But the investigations of the commissioners showed a very general violation of the Iaw in this respect. In many cases, instead of specie a' kind of paper denominated "specie certificates," was used, in sorae cases specie borrowed for the occasion was used and immediately returned to the owner; sometimes even a nail keg filled with old iron, or gravel, or sand, and covered over the top with specie, was employed to deceive the commissioners, and sometimes the notes of individual subscribers or others, usually denominated "stock notes," were received and counted as "specie." The books of the banks were also kept in so imperfect a manner, sometimes with fraudulent design, as often to give little indication of the transactions of the bank or of the true condition of its affairs. By the ownership of several banks residing in one company of men: by frequent sale and transfer of stock, and by many other tricks and turns, a little specie was made to go a great way in tlooding the country with worthless paper. Under this law 40 banks went into , operation, many of them in obscure places, where there were in reality no towns at al!, and before thecommissioners could perfect their work of reform the crisis came. Failure succeeded failure until only seven banks remained, while the worthless paper afloat represented more than a million dollars. But in the midst of all this speculation and excitement Hon. Alpheus Felch was appointed bank commissioner. lic was known to be a man who never swerved from duty, and the bank officers attempted sharp practice. Specie boxes were got and filled nearly full with old scrapiron, then covercd with specie. -Mr. Cornmisioner was asked to take the mint count as marked on the box, but he was not caught so easily. The boxes were emptiedon the floor and the fraud exposed. Another trick was tried. The banks clubbed together and procured specie sufficient for one bank, and while the commissioner was raaking his examination he was asked what bank he would visit next. VVhen that was ascertained, the specie which had been hastily repacked was loaded into a wagon and hurried off to the bank indicated. But the commissioner was too sharp for them, and instead of going to the one named changed his mind and went in another direction. Thus the frauds were all exposed. But at this time the country was running wild with speculation. Prices were inflated and everybody was rich. Money was plenty, and men suddenly elevated themselves to wealth and power. But when the collapse carne, these fortunes vanished as if by a single stroke, and 99 out of every ioo of the speculators were left without a dollar. Then congress came to the aid of the speculators by passing the bankrupt law, which mány availed themselves of and paid their debts. Many good specimens of this wildcat money are in the possession of the Pioneer Society of Washtenaw county, and are well worth examining. Many of the bilis have no dates, and some even are not signed by either a president or secretary. A collection comprising a $10, $15 and a $20 bilí, of the Washtenaw County Volunteer Family Relief Fund is especially noticeable, the $10 and $15 bilis having written across the face, in red ink, "Redeemed, June 28, 1883. Signed Fred H. Belser, Dep. County Treasurer." Wild-cat banks originated in this way: In the year T835 Samuel W. Foster and John Holden, of Scio, Washtenaw county, applied to the Bank of Michigan, in Detroit, for a loan of money to buy wheat to stock their mili. The bank could not accommodate them, but referred them to a broker doing business in the basement of the bank building, where they found money if they would submit to a "shave." On their return home they conceived the plan on which the "wildcat" banks were gotten up. Foster presented the bill to the legislature, and the bill was passed, the four members heretofore mentioned being the only ones brave enough to vote against it. Very soon after the enactment of the law, banks sprang up all over the state, and their bilis were as plenty as raspberries. In Washtenaw county there was one at Ann Arbor called The Millers' Bank of Washtenaw, which was conducted fairly, and paid all its indebtedness. Another was started in Lowell, an imaginary place on the Huron river; another at Vpsilanti, one at Saline, one at Manchester, and one at the village of Sharon. In some cases where stockholders had not enough land of their own ti. give the required security, they niurtgaged a piece of the government land to make out enough. Fortunes were made in a few months. New cities and villages sprang up as fast as the surveyor could survey and plat them, and splendid maps showing contemplated railroads, hotels, milis and large public parks were shown to the would-be investor. High-sounding names were given to the streets and avenues, and the most glowing inducements held out to the stranger, who could not find these mythical places even with a guide and map. In Washtenaw county there were towns called Boston, Saratoga, Windliam and Sharou, and the plats of them are on record in the register's office. The five dollar bill of the Exchange bank of Ann Arbor has a design of a railroad train, the engine of which is of itself a curiosity. This bank presumably won the confidence of its customers by having "safety fund" printed on its bilis. A real curio in this collection is a bill of the bank of Virginia, daUd at Richmond, September 2, 1S20. It is in the form of a promissory note, the owner's name, D.Conner, being filled in with ink, while the president, directors and company agree to pay the bill, which is No. 379. Another curious one is a "government stock bond" bilí for $1.50, the figures $1 1-2 and $1.50 being printed in the denominational corners. But the most curious of all, which, while like the tvvo just named, is not Michigan money, is a great relie. This is a diminutive bill three inches long and one and onehalf inches wide, on which is printed: "Act of Fetwuary i7th, 1864. The Confedérate States of America will pay thirty dollars for 7 months' interest due July ist, 1867, on bond No. 8,225, for $i,oco. Sixth series." There are also a number of other I states represented in this collection, and also several speculative banks of Canada. The oddest features of the whole thing, perhaps, are the denominations. There are Si .50 i bilis, $3 bilis, $4 bilis, $8 bilis and i $15 bilis, and still there are people who sigh for "the good oíd days" when a dollar was worth 100 cents today and not a penny tomorrow. - Detroit [ournal. Guaranteed Cure. ffe nuthorize our advertised drugííist to seil Dr. Kings' New Discovery for Consumption, C'oughs and Colds. upon this condition. If you are afflicted with a Cough, Cold or any Lung, Throflt or Chest trouble, ond wUl use this remedy as directed, giving it a fair trial, and experience no benefit, you may return the bot'le and liave your nioney refunded. We could not make this offer diil we not know that Dr. King's New Discoyery coulrl be relied on. It never disappolnts. Trial lottles free at Eberbach & Son. DrugsHirr. .- 1 1 1 1 1 cr. T. Ifauí-slor, Man'h-sii-i-. Laige alee 50c and $1.00. A Fool and His Money Soon Part Cümpany. Tliic oíd cnd tme adauc H vividy brougbi to mimi by :n Item in the ilaiiy papen (A receol date. A WuUamstom farmer had sj.ooo si .en ly a lnii!;ir t !c Other Uigbt. It was money he liad withdrawn fi-din tihe bank becave lie w&e afrald that depoeltory migbt borat up. He has ícw synipathizci-s. It is just that kind of íoolish. scary people that cause bauks to bnrst and many to suffer. A bank is ritu for niimey making just the same as is any nu'rcantile Imsinese, and a.s that farmer evidently rum his íarm. TQie mooiey yooi deposil in a bank does not He ttiere idlc, hoarded up and goaráeá tmtil you get ready to cali foír it. That wouldn't be businem. Uw bonk couWn't afford to hire clerks aiwl accountants and pay rent and ■xjicns.'s. if that course was puirsuetl. There could 1m' do banks undor BUCb a policy. But the momey you deposit is loaned to business men to cnrry on tlie business of the country, and who must have moiney to do it with In oirder to pny yon 4 per cent. interest the ltank ïnuLSt get 6 or 7 per cent., and it does so by loanins the moiney to responsible people. Ttiien when a time like the present coones on, men like this "Williamston farmer get scared and draw thejr money out of the bank and board it up in an old stockins to lay ldle, floinií no peC8OO any possible good. SiipiMK-ing, for instanc, a bank has $500,000 an deposit. Tliis inoney has beent loaned by the bank so tliat tli. re are only .:{0,000 or $10,000 lcft. Suddnily a scarr comes. Depositors all .rush to ald demand tlicir mnmey at on.-e. The !ank can not. pay. The moiiry 1b loaned out lor :!0, CO, 90 d.iys cw more, on well sccuri-ii ootee. Tii securltles, tln-own upon the market, realize practicaily notblng in a panto. And bo the bank. althoui;H dohijí a flotii'ishiii- business, is torced to close up and the depositoi-s loso, beoanse of the extri'iiie iici'vousnrss OU the few. doder uur present Bye tem, wiih a bank examinar wim keepe a keen eye apon tin; condition oí all the banka al Uw state, and wlth a law tliat compete a beuk ti reinier :i statement al any time wben called UpOQ, Miehiiïan's state banks are as Sound as bbe nat ii mal banks, and they are ei nisidered Hy the commercial men oí the entire world tO be the most stalile n existi'tiee. It is not pcM(Me ti) provide anainst all eonttngenclee, any more than it is ptwnTNc d 'reet a dweütng or sti-uitni-e tliat a cycloine wlll not (lenmlisli. Bnt as far as safety is eonoerned, tho lanks of ttÜB state are cm a peur with any in the world. Tlie eiifety of any nation Uea In the solx?r, commou sense of the people. The saiety of all commercial institnticn ateo lies in the cool, calm, gxd Jndgmeat of tiie people. It is not gtKxl jiulgment to withdraw inivney trom a lwink to be the prey of tliievcs and burgiars. This view of the case is not in the interest of bhe banks, it is in your interest ü' yon ■have a:ny money in a bank. and teel at all nerveus.