A HISTORY OF
BANKING IN OHIO.
BY P. W. HUNTINGTON,
President Huntington National Bank,
Columbus, Ohio.
The early history of banking in the
state of Ohio is much
obscured by want of records on the
subject, but enough is known
to demonstrate the fact that banking has
been an important
factor in the growth of the commonwealth
from the beginning
of its existence down to the year 1912.
The first institution in Ohio to issue
notes for circulation
as money was the Miami Exporting Company,
of Cincinnati,
which was incorporated April 15, 1803.
The act of incorpora-
tion has no reference to a bank. There
is no intimation any-
where in the charter that a bank was
meant, nor that the com-
pany was granted authority to issue
notes to be used as money;
but it did issue them and they passed
into circulation. These
notes were not all finally redeemed. In
the early history of the
state, banking was practically free,
and, as a natural consequence,
it was fraught with disaster to
stockholders and to the public
alike. From 1803 down to the year 1845
the conditions under
which the business of the state was
conducted were most de-
plorable.
Between March 10, 1808, and January 14,
1818, there were
20 banks incorporated in the state, with
an aggregate authorized
capital of $4,350,000; but it is,
perhaps, impossible now to ascer-
tain what proportion of this authorized
capital was paid up.
These banks were located in the
southwestern, the central, the
eastern and the northeastern sections of
the state, and often
in what were then isolated places, with
only occasional com-
munication with the outside world. Most
of them failed or
were closed out with heavy loss. Their
charters were very
crude in form and often at great
variance with each other in
their provisions, and, except that, in
some cases, and under
certain conditions, the directors might
be held personally respon-
(312)
A History of Banking in Ohio. 313
sible, there was little or no security
provided for the public,
which suffered frequent and heavy losses
from bank failures.
Much of the paper money circulated among
the people had been
issued hundreds of miles beyond the
borders of the state, and its
value was not, and could not be, known
by those among whom
it circulated.
As an illustration of the kind of banks
established during
this early period, the report of the
Comptroller of the Currency
for the year 1897 names one of the
"wild-cat" banks of Michigan,
which never had any specie, although its
liabilities exceeded
$38,000; and it had no assets of any
kind. The Exchange Bank
of Shiawassee, when it failed, had in
its safe seven coppers, and
a very small amount of paper; while it
had liabilities to the
amount of $22,267. A history of Jefferson
County, Ohio, states
that a bank at Salem in that county,
failed in 1816, and "the
only asset was a table." The same
authority says another bank
in that county had, as the only asset,
"a keg filled with nails,
having a mere covering of gold and
silver coin." Other similar
cases are recorded, showing in many
cases, great want of intelli-
gence, and of integrity, on the part of
those who, under a system
of free banking, undertook to carry on
the business.
Wildcat banking was a curse to Ohio, in
common with
other Western states, and the spurious
credit established by it
was a blot on the fair name of
commercial integrity. The losses
imposed by this evil were as widespread
as the communities of
the state, and every man was liable to
have in his pocket money
which was worthless, or which could be
passed only at a ruinous
rate of discount. A clause is found in
some of the early bank
charters that "the capital stock
shall never be impaired by the
dividends;" and the legislature
appears to have assumed that
the banks created by it had a right,
without the grant, to issue
notes for circulation. How that supposed
right was used, and
abused, can never be fully known.
In a communication from Ralph Osborn,
then auditor of
state, to the legislature, in the winter
of 1820, he reported
$28,934 of bad bank notes in the state
treasury, of which he
had "no doubt the greater part is
irrevocably lost to the state."
In 1831 this amount of bad money in the
treasury had increased
314 Ohio Arch. and Hist. Society
Publications.
to about $33,000. On May 20, 1820, the Niles Register, a news-
paper published at Baltimore, Md., named nine specie
paying
banks in Ohio, and the "notes of the rest are
generally 25 to 30
per cent. discount." It is noteworthy that one of
these nine specie
paying banks was the Franklin Bank of Columbus.
The facts here mentioned, and many others which might
be cited, show, conclusively, the vital necessity which
then ex-
isted for the exercise of more wisdom, or, may it not
be said,
of some wisdom in the organization and management of
banks.
The situation was not unlike that in England during the
period,
in the time of William and Mary, when clipped coins
made up
most of the circulating medium of the realm, and it
became
absolutely unbearable.
The reports of banks made to the Auditor of State, and
by
him reported to the Legislature, as of the first day of
January,
1843, show the condition of the fifteen banks so
reporting to be,
in the aggregate, as follows, to-wit:
Total loans ............. $4,099,746 Ave. per bk ...............
$273,316
" Specie
on hand.... 557,309 " " " .............. 37,154
" Circulation ....... 1,145,165 " " " ............... 76,344
" Deposits.......... 740,666 " " " ............... 49,377
Of the fifteen reporting banks, the Commercial Bank of
Cincinnati made the largest report, with deposits of $205,022;
and the Bank of Mt. Pleasant made the smallest, its
deposits being
only $393. This report of the State Auditor is
inadequate, and
does not show a full statement of the Banking business
of the
State at the time of its date, because some of the
chartered banks
refused, for political reasons, to report their
business, and be-
cause there was no provision in their charters
requiring them
to do so; and because, also, much of the banking
business of the
State was conducted by private bankers, who were not
expected
to report. But it serves to show the immense growth of
the
banking business in the State during the seventy years
which
have elapsed since its date.
The strife here referred to, between the law makers of
the
State of Ohio and its bankers, finally culminated when,
in the
winter of 1853-4, the Legislature passed a law known as
"The
A History of Banking in Ohio. 315
Crow-bar law," which was designed
to give any Sheriff the right
to enter, by force, into any bank vault
in his county and help
himself to such money as would satisfy
his demand for taxes.
One bank, in eastern Ohio, was subjected
to this drastic treat-
ment, when the sheriff, backed by his
posse, broke open its
vault and helped himself. The Columbus
banks paid this out-
rageous tax, under protest, rather
than have their vaults de-
stroyed; but immediately brought suit
for its recovery, which
was accomplished when the Supreme Court
of the State pro-
nounced the "Crow-bar law"
unconstitutional. The exigencies
which soon required great expansion of
credit by the general
Government, chiefly through the medium
of banks, brought peace
between democratic statesmen and bankers
everywhere.
An ever present form of loss and
annoyance to bankers,
and to the public also, during the first
sixty years of banking
in Ohio, was the unending supply of
counterfeit bank notes
which were passed upon unsuspecting
victims. This was a
crying evil; and no bank teller was
expert enough to detect all
the spurious currency offered,
innocently in most cases, to him.
For the twelve years following 1850 a
copy of "Thompson's
Monthly Bank Note Reporter" was
almost as necessary to the
teller's desk as the teller himself. As
late as 1856, it was
estimated that there were over sixteen
hundred plates in use,
in the United States, from which bank
notes were struck for
circulation. These bank notes were of a
great variety in color
and design, and were of many different
sizes. No man could
remember all of them. Hence the constant
necessity for refer-
ence to Thompson's Reporter, which
undertook to publish a
verbal description of each genuine bank note plate from which
circulating notes were struck-no small
job; and hence also
the constant loss arising from
counterfeiting. Since the Gov-
ernment undertook to furnish all the
circulating medium, the
number of plates from which money is
struck has been reduced
to a minimum, while, at the same time,
the higher grade of the
paper used, and the greater skill
displayed by the engraver,
have so greatly increased the difficulty
of successful counter-
feiting that the cost and risk of the
fraud deter evil-minded
persons from attempting it.
316 Ohio Arch. and Hist.
Society Publications.
To the accomplishment of something
better in the character
and form of the business of banking,
some of the best men of
the state of Ohio, in the years
following 1840, directed their
thoughts and energy. Under the
leadership of Alfred Kelley,
of Columbus, then a member of the state
senate, the legislature
of the state passed, on the
twenty-fourth day of February, 1845,
an act entitled, "an act to
incorporate the State Bank of Ohio
and other banking companies." In
the preparation and advocacy
of this act Mr. Kelley showed himself to
be a man whose wisdom
fairly gave him the title of statesman.
The act was passed by
a strict party vote, the Whigs voting
for the measure and the
Democrats opposing it. The capital of
the state bank was fixed
at $6,150,000.
The act did not establish a state bank
proper, but incor-
porated "the State Bank of
Ohio," with its business done by
branches. Forty-one branches were
established in 35 counties
and these branches were governed by a
board of control, com-
posed of one member representing each
branch. This board of
control met quarterly in Columbus, and
Judge Gustavus Swan,
of Columbus, was elected its first
president.
No branch was allowed to organize with
less than $100,000,
nor more than $500,000 capital; but in
fact no branch ever had
more than $175,000 of paid up capital.
Notes for circulation
were supplied to the branches by the
board of control, through
its secretary, and were redeemable only
at the branch which
issued them. A branch could issue
circulation on its capital up
to and including $100,000, for twice
that amount; on the second
$100,000, or part thereof, one and a
half times the amount of
capital paid in, in excess of $100,000.
Before the board of
control could deliver to any branch
notes for circulation, they
must require such branch to pay over, or
deposit to the credit
of the board, either in money or in the
bonds of the state of
Ohio, or of the United States, or in
good notes secured by mort-
gages on real estate, an amount equal to
10 per
cent. of the
notes for circulation to be delivered to
such branch. The bonds
or money so deposited were denominated
the "safety fund," and
were held by the board of control, as
the property of the board,
in trust for the several branches of the
State Bank of Ohio, as
A History of Banking in Ohio. 317
a fund for the redemption of the
circulating notes of any one
or more of said branches that might fail
to redeem its notes.
These branches were generally located
one in a county; but
there were two in Chillicothe, two in
Columbus and two in
Cleveland, each of which had a
successful career, until forced
out of business, about 1863, by the
general government, which
assumed the right to furnish all the
circulating medium issued
in the country. Two branches were
established in Cincinnati,
but one of them failed early in its
history and the other soon
wound up its business as a branch bank,
and continued as a
private bank, under the title of
Groesbeck & Co. Two branches
were established, at different dates, in
Toledo, but both soon
failed. One failed at Akron. One failed
at Newark.
In the failure of these branch banks the
public had an
experience which was new in the history
of banking. Though
five banks had failed, their circulating
notes still passed at par
and were redeemed in coin as promptly as
the notes of any
solvent bank. The public suffered no
loss or inconvenience
whatever.
Judge Gustavus Swan resigned as
president of the board
of control November 21, 1854, when Dr.
John Andrews, then
president of the Jefferson Branch Bank
at Steubenville, was
elected to succeed him. Dr. Andrew
served until November,
I866, when Joseph Hutcheson, of
Columbus, was elected, and
served until May, 1870. Then J. Twing
Brooks, a lawyer of
Salem, was elected. He finally wound up
the affairs of the
institution.
The service rendered to the business of
the state by the
State Bank of Ohio was of inestimable
value. In a period
when there was neither telegraph pole
nor railroad tie in the
state it afforded a safe and perfectly
reliable circulating medium,
by which the business of the state was
conducted; but more, and
even better than this, it gained the
absolute confidence of the
people, who came to believe, and with
good reason, that its
red-back currency was as "good as
gold." In the 20 years of
its chartered life the State Bank of
Ohio passed, unscathed,
through three severe money panics, in
the years 1847, 1857 and
1861.
318
Ohio Arch. and Hist. Society
Publications.
Of the pioneer bankers who, from time to
time, were
members of the board of control, there
is now but one survivor,
John Gardiner, who, at age of 96 years,
is still the active
president of the Norwalk National Bank-a
splendid man,
physically and mentally.
The State Bank of Ohio demonstrated the
wisdom of its
founders. It lived through some
troublous times, but kept its
integrity. It did what it was designed
to do, provide a safe
circulating medium for the people of the
state, which passed
everywhere as current as coin. At the
same time the Bank
paid its stockholders a good interest on
their investment.
But the success of the bank was assured
under the control
of such men as managed it. Read the
list: E. H. Moore and
John Welch of Athens; Colonel John
Madeira and Dr. Albert
Douglas of Chillicothe; W. A. Otis, T.
P. Handy and Thomas
M. Kelley of Cleveland; Valentine
Winters of Dayton; Hosea
Williams of Delaware; Gustavus Swan,
Alfred Kelley, and
William B. Hubbard of Columbus; Henry E.
Parsons of Ash-
tabula; James Purdy of Mansfield; Joseph
J. Brooks of Salem;
John Kilgour and John J. Groesbeck of
Cincinnati; John Mc-
Curdy; Chauncey Dewey of Cadiz; Darius
Tallmadge and M.
A Daugherty of Lancaster; Dr. John
Andrews and William
Spencer of Steubenville; Henry B. Curtis
of Mt. Vernon; E.
De Witt and John R. Finn of Elyria; John
Bacon of Springfield;
Noah L. Wilson of Marietta; John H.
James of Urbana;
Jonathan Binns and J. W. Gill of Mt.
Pleasant; H. J. Jewett
and Daniel Applegate of Zanesville; John
Gardiner of Norwalk;
Joseph G. Young of Piqua; Eli Kinney of
Ripley; E Quinby,
Jr., of Wooster; Abraham Hiveling of
Xenia, and John C. Tall-
man of Bridgeport.
It may be safely assumed that no other
organization of
equal number, either secular or
religious, ever existed in the
state which included such an array of
good men - men remark-
able for intelligence, morality,
business integrity and all that
makes for good citizenship.
Abounding as were the benefits bestowed
upon the people
by the State Bank of Ohio, the limit of
this paper prevents
A History of Banking in Ohio. 319
further detailed description of them,
and I beg to hasten to a
specific account of the early banks of
Columbus.
The Franklin Bank of Columbus was
incorporated, by an
act of the legislature, on February 23,
1816. Lucas Sullivant
became its first president, but retired
after two years of service.
John Kerr was president in 1819. In 1823
Gustavus Swan suc-
ceeded Kerr in the presidency and served
until 1843. In 1818
William Neil was elected cashier and
served until 1826, when
he was succeeded by Jonah M. Espy, who
remained in office
until the charter expired in 1843.
It is undoubtedly true that the fine
reputation and financial
success of the Franklin Bank was due, in
great measure, to the
painstaking care bestowed on it by Mr.
Espy as its executive
officer. He seemed to be, by nature, a
good banker. He resided
for many years on the south side of Town
Street between High
and Third Streets. (Columbus.) Here, in
the year 1826, his
daughter Isabelle was born. As a girl,
and later as the wife and
widow of Dr. Francis Carter, she was a
brilliant member of the
best society of the Capital city. Many
persons now living recall
with great pleasure the amiability of
character and the grace of
manner by which, during all her long
life, she was adorned.
During the legislative session of
1833-34 the Clinton Bank
of Columbus was chartered, and in
October, 1834, the bank
began business. William Neil was elected
president and John
Delafield, Jr., cashier. In January,
1846, Mr. Neil was succeeded
by William S. Sullivant, who continued
as president until the
charter of the bank expired in 1854. Mr.
Delafield was succeeded
as cashier by John S. Jeffords in
January, 1838. Jeffords died
in April, 1842, when David W. Deshler
was elected cashier, and
continued in office until the expiration
of the charter.
The charter of the Clinton Bank, like
all the early bank
charters of the state, would, in these
days, be considered as
wanting in requirements for the safest
form of bank manage-
ment; yet while many banks of its class
in the state went out
in insolvency, the Clinton Bank of
Columbus was fortunate in
having able and upright men as its
officers and directors, who
brought it to the end of its charter, a
successful, regular divi-
dend paying institution. After the
expiration of its charter, a
320 Ohio Arch. and Hist.
Society Publications.
number of the principal stockholders
formed themselves into
a private banking company, known as the
"Clinton Bank," under
the management of William G. Deshler,
the well-known retired
banker of to-day. This business finally
became a part of the
National Exchange Bank of Columbus.
During the legislative session of
1837-8, the "Mechanics
Saving Institute" of Columbus, a
bank of deposit, was in-
corporated. William B. Hubbard became
its president and
Thomas Moodie its cashier. This business
was taken over by
the City Bank, a state stock bank, in
1845. Joel Buttles was
president of the City Bank until his
death, in 1850. He was
succeeded by Robert W. McCoy, who served
until his death, in
1856. Thomas Moodie was cashier during
the entire life of
the bank. Mr. Moodie was a Scotch
Presbyterian, an elder,
and a good man; but there was a want of
directness in his busi-
ness methods, which finally led him into
trouble. In November,
1854, the City Bank suspended payment,
and its doors were
closed.
The Exchange Bank, a branch of the State
Bank of Ohio,
in Columbus, went into operation on May
24, 1845, with a paid
up capital of $125,000. William B,
Hubbard was elected presi-
dent. He retired in June, 1852, and was
succeeded by William
Dennison, Jr., who served until January
1, 1856, when David
W. Deshler succeeded him. Herman M.
Hubbard was cashier
until June, 1853, when he was succeeded
by Morgan L. Neville,
who died in December, 1855. Charles J.
Hardy was elected
cashier January 1, 1856. Mr.
Hardy served in this institution
until it was wound up in 1863 and
continued as cashier in
various banks, state and national, which
succeeded it, until July
2, 1910, when the business of the Deshler National Bank, of
which he was cashier, was taken over by
the Hayden-Clinton
National Bank.
At that time, after more than 54 years
of unblemished
official life, Mr. Hardy gave up active
business. The evening
of his life is being spent in honorable
retirement, with his family
about him, and the care of his flowers
for a pleasing occupation.
His spotless character and his faithful
service need no eulogistic
comment from me. In speaking of him the
phrase of the
A History of Banking in Ohio. 321
Psalmist, "Mark the perfect man,
and behold the upright; for
the end of that man is peace," may
be used with perfect applica-
tion.
The Franklin branch of the state bank of
Ohio in Columbus
was incorporated by Dr. Samuel Parsons,
Judge Gustavus Swan
and their associates, and began business
July 1, 1845, with a
paid up capital of $175,000. Dr. Samuel
Parsons was elected
president and served until May, 1862,
when he retired. Thomas
Wood then acted as president for one
year, and in July, 1853,
David W. Deshler was elected to succeed
him. James Espy,
afterwards a well-known banker of
Cincinnati, was the first
cashier, and served until July, 1854,
when he retired to become
an active partner in the banking firm of
Kinney, Espy & Co.,
of Cincinnati. On the retirement of Mr.
Espy, Joseph Hutcheson
was elected cashier and continued in
office until the bank, which
had been a profitable investment for its
stockholders, was merged
into the Franklin National Bank in 1863.
During the decade between 1850 and 1860 there were three
private banks doing business in
Columbus, viz.: the association
known as the Clinton Bank (mentioned
above), Miller, Donald-
son & Co., bankers, and Bartlet
& Smith, bankers. The last two
named were not successful and were
closed out with serious
loss. On January 1, 1866, the private
banking house of P. W.
Huntington & Co. was established, at
the northwest corner of
High and Broad streets. Its business was
a successful and
growing one until June 1, 1905, when it was
merged into the
Huntington National Bank. On August 1,
1875, the Capital
City Bank was organized by Samuel S.
Rickly, who became its
president. It has always been a
successful institution and under
the active management of Ralph R.
Rickly, its present president,
gives promise of a long career of
usefulness in this community.
Closely allied to moral soundness in
banking is commercial
integrity in the community. The two walk
together, and the
highest plane of excellence can be
attained in neither without
the co-operation of the other. By this
relationship credit is
established and maintained; but however
valuable and excellent
in society, however profitable and
pleasing, credit, public or
Vol. XXIII - 21.
322
Ohio Arch. and Hist. Society Publications.
private, may be to those who extend it,
it is in vain to hope
for its highest development, or even to
imagine the possibility
of its existence, without honesty and
rectitude on the part of
those to whom it may be extended. Credit
is very subtle in its
nature, and it can no more be forced by
laws, it can no more
be obtruded by authority, however high
and powerful, than an
article of faith can be forced on the
understanding without
proper proof or evidence; but it is
always fostered and
strengthened by well-directed enterprise
and integrity of purpose.
Is it then unreasonable to believe that
the constantly advancing
prosperity of Columbus, founded upon
carefully protected
credit, is closely connected with its
conservatively managed
banks; and that, on the other hand, such
banks are enabled to
maintain themselves in character and
position, partly at least,
by the co-operation of their friends in
the business community
to whom they extend lines of
credit? It must be so, and it
certainly follows, "as the night
the day," that prosperity is
realized, in the highest sense, only
when society at large, and
men in all branches of business, work
together, with a firm pur-
pose to deal honestly, to encourage
integrity, and to stamp out,
with an unrelenting purpose, all unfair
dealing and fraud.
Every man is interested in this matter.
Let us all, then, work
together for the accomplishment of the
purpose to establish the
business of our community upon the
highest level of excellence.
As a means to the accomplishment of the
end here suggested
the present system of banking in
Columbus, with its supervision
by our Clearing House Association, is a
potent factor. Under
this system our banks are prosperous,
and are widely and favor-
ably known. Some of them have business
connections throughout
our country, and in foreign lands, where
their evidences of in-
debtedness pass unquestioned.