Ohio History Journal

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THE FAILURE OF THE OHIO LIFE INSURANCE

THE FAILURE OF THE OHIO LIFE INSURANCE

AND TRUST COMPANY, 1857

 

by MORTIMER SPIEGELMAN

Most writers on the economic history of the United States refer

to the Ohio Life Insurance and Trust Company as the institution

whose failure precipitated the panic of 1857. The failure is usually

attributed to depreciated railroad investments and the losses stated

in amounts as high as 7,000,000 dollars.1 A search into the history

of this institution that played a leading part in the early financial

history of Ohio, however, brings out a somewhat different picture;

it shows that the failure was due much more to the inelastic cur-

rency of that period, adverse tax legislation, and gross mismanage-

ment.

The Ohio Life Insurance and Trust Company was organized in

Cincinnati in 1834 to bring outside capital into the state of Ohio.2

It was incorporated on February 12, 1834, by an act of the General

Assembly of Ohio,3 and the first board of trustees was elected

September 30 of that year. Most of the stock was subscribed by

nonresidents, as was desired, and an office was opened for business

in January 1835. The most prominent among the 35 incorporators

were Jacob Burnet, a former United States Senator; Calvin Pease,

a judge of the supreme court of Ohio; Allen Trimble and Joseph

Vance, former Ohio governors; and Alfred Kelley and Benjamin

Tappan, both connected with state internal improvements.4

The act of incorporation gave the company power to perform

the following functions:

 

1 Lester W. Zartman, Investments of Life Insurance Companies (New York,

1906), 129.

2 Report of the Special Master Commissioner in the Matter of the Ohio Life

Insurance and Trust Company, May 19, 1852 (Cincinnati, 1852). Referred to here-

after as Special Master Commissioner's Report, 1852.

3 The Charter and By-Laws of the Ohio Life Insurance and Trust Company

(Cincinnati, 1838).

4 Adelaide R. Hasse, Index of Economic Material in Documents of the States of

the United States: Ohio (2 vols., Washington, D. C., 1912), I, 262.

247