Pittsburgh Post-Gazette from Pittsburgh, Pennsylvania • Page 14

THE ITT BURGH GAZETTE TIMES RISC AND GROWTH Or A CENTURY AND A QUARTER Marked Change That Has How a Great, Beneficent System Was Born and Grew Commodities and Tokens Passed Current When The Gazette Times Was First IssuedPittsburgh Always Prominent in the Forward Banking Movement of the World. Taken Place In Banking Our First Currency Specie, "Wildcat," "Shin-plaster" and National Bank Notes Money and PatriotismIntroduction of Different Kinds of Banks. the event Into an advertisement For instance, Harry Williams, manager of the old Academy of Music, advertised that every purchaser of a ticket for his housi on a specified day who presented a bank note would receive at least one silver half-dollar In change. Merchants advertised that they would pay out silver as "change" in cash transactions, and even some of the barber-shops put up signs reading: "New silver coin given in change this day." As anticipated by the wisest advocates of the movement, specie resumption was accomplished without a ripple on the surface of banking affairs. Without doubt the fact that confidence In national bank note had become firmly established was the chief factor making the movement easy.

Paper money was more easy to carry than coin, and It was not many years before the public demanded silver certificates for use instead the heavy sliver dollars. So far as the average citizen could discern resumption of specie payments merely drove out the "shinplasters" and substituted silver half-dollars, quarters and dimes and the convenient nickel. With the resumption of specie payments, however, the national credit was re-established in the eyes of the A great trade revival took place which extended throughout the United States, and everybody thought the last of cur- rency troubles had been experienced, i Such was not the case, however. The "battle of the standards" was yet to be fought, and before victory was proclaimed "Written for the 125th Anniversary Number of The Gazette Times, Br JOIUV O. BAG LIN.

I i.an. lp.1 Editor. to the credit of the drawer in the bank upon which the draft is made. The Pittsburrgh Clearing House Association was organized March 29, 1865, when there were but 12 banking Institutions In the city, and It is given the rank of fourth as to date" of organization In the United States. John D.

Scully, then cashier of the First National Bank, took a prominent part in its establishment. He was its first manager, and later its president. From 1S65 to the present date checks representing approximately $45,000,000,000 have been cleared by this institution without the ioss of a single cent. The process of clearing has been so systematized as to be very simple and expeditious. Before the clearing house each bank would send messengers to every bank on which its customers had received checks and present the same for collection.

Each messenger would be compelled to carry the money thus received back to his own bank, at the risk of loss or highway robbery, which sometimes occurred. Under the clearing house system there is a common meeting place and a specified hour at which checks deposited the preceding day are presented to the representatives of all the banks in the clearing house territory. It may be found at the clearing house that the customers of the First National Bank have deposited therein for collection checks drawn by customers of the Second National Bank to an amount of $100,000, and that the Second National's customers have presented checks for collection drawn by custom-1 as "change" was attended by some amusing incidents. Tenting a Shinplaster. An old Washington county subscriber of The Gazette tells his experience.

As a boy he had been sent with a one-horse wagon load of farm produce into Canons-burg to exchange roasting ears, squashes, for tea. coffee, and sugar. On his way through the main street he was hailed by a woman who asked him if he had any roasting ears to sell. He replied: "Yes, two dozen for a quarter." "I will take two dozen." The corn was banded over and the woman tendered a new 25-cent "shln-olaster." "What is this?" inquired the boy I want money." "Well, that's money," responded the customer. "It's the new government money." The boy fingered it suspiciously, and then, as a bright look crossed his face, he cried: "Just wait a.

minute." Jumping from his seat and leaving his team, he ran across the street to the little postofftce. "I want to buy a stamp," he said to the postmaster. He tendered the new money, received his stamp and "change" In money that resembled the 25-cent piece, only smaller In size, and returned to his wagon. "It's all right," he smiled at the. waiting customer with her arms full of corn, "It's all light If the postoffioe will take it for stamps, it must be good money." Oter Stable Currency.

The national bank notes immediately the country was compelled to pass through one of the most acute financial panics and one of the deepest and most widespread waves of business depression In ita history. This was the period embraced within the years 1893-1896. A Period of Distress. Railroad companies representing thousands of miles of track and many hundreds of millions of stocks and bonds went Into bankruptcy and passed through AT PITTSBURGH CLEARING HOUSE rr law made a legal tender. If he lived in Kentucky he could, perhaps, offer a coon-skin or a beaver skin, which passed as money in those, days.

If he lived in the more closely settled portions of New England he may have possessed a small foreign coin, or a piece of a Spanish milled dollar, for it was a common practice a century or so ago In the then newly freed colonies to cut a Spanish silver dollar into two or more pieces and use these fractional parts of a coin to make minor cash payments. It is true that so-called paper money was issued to Pennsylvania as early as 1723, the continental currency was first, issued in 1775; but neither on the birth of The Pittsburgh Gazette, nor for many years afterwards, was there any uniform or stable currency of HEN you. handed the corner newsboy 2 cents this morning for a copy of your favorite paper, caught a pay-as-you-enter car, dropped a nickel in the con-ductor'a ready palm, and then started to take a glance at the news from all quartern of the globe as yon sped toward your office or shop, you were unconsciously enjoying one of the greatest conveniences of social life. You were making use of a medium of exchange that is universally accepted, the standard of value of which is never disputed, and instantly completing a transaction that is multiplied in some form millions of times through out the United States every hour of the day. A very different transaction took place when your great-great-grandfather bought his copy of The Gazette 125 years ago.

Possibly he had exchanged a cord of wood or a load of vegetables for a subscription running a specified period. If he lived in Virginia at that time he may have tendered a leaf of tobacco, which was hv banks through the states, and to substitute something like a uniform cur-lency for the heterogeneous mass of stata bank note issues. Strain of the Civil War. At the opening of the Civil war in I860, the national treasury was depleted and the national credit reduced to a 12 per cent basis. Sales of public lands had dwindled to nothing.

Special war taxes did not become productive until the third year rf the conflict. From government expenditures averaging $65,000,000 per annum in the Six years preceding 1861, they lumped to $475,000,000 1862. and from that figure reached the appalling sum of $1,308,000,060 in 1S65. The strain upon banking and financial resources was unprecedented in the world's history. The government was forced to resort to what was practically fiat money.

Over 20 different forms of paper were issued bearing interest ranging from 7.3 per cent per annum down to nothing, and with maturities ranging from 30 days to 40 years. Among the paper which aroused the greatest opposition and which were justified only as a war measure, were the "legal tenders" the old greenbacks which at a 4ater era and in times of peace were advocated by the Populists. Under these unprecedented conditions the national banking act received the signature of President Lincoln on February K. 1853. To provide a market for government bonds, the new institutions chartered under this, act were empowered to issue notes based npon government bonds as security, and in order to make note issuing the exclusive privilege of national banks state banks were taxed 10 per cesjt per annum, while national banks were free of tax.

A bitter fight between state and na- tlonal banks ensued, and a feeling of patriotism bad more to do with the survival of the new system during the early months of Its career than any conviction that It contained the germs of extended life. Xational Currency Introduced. The reception of the new national currency was not htirely cordial. Owing to the prohibitive tax on state bank notes the latter rapld'y and the state Institutions which did not Im mediately embrace the new system were inclined to insist upon settlement in spe- rv 'is. ers of the First National to the amount of $05,090.

The balance, to be paid in legal tender money to settle the $195,000 checks as between these two banks alone is only $5,000. Simplicity of the System. There are 20 members of the Pittsburgh Clearing House Association, and In aaMition to clearing- their own Individual business they handle the checks 4 sr; and drafts of about 175 other banks and trust companies located within the Pittsburgh district. It may happen that thousands of checks and drafts, representing millions of dollars are presented on a single morning for clearance, and less than actual cash will be needed to settle the aggregate transactions, and the work will be accomplished within an hour. All debit balances must be settled in gold or legal tender money.

To further simplify the work of actual settlement and to avoid loss by abrasion in the handling of actual coin, banks that are of the clearing house may deposit in a designated safe deposit vault quantity of gold coin, against which ra 1 1. 1 1 i ifirta fiat af tha 3 I -1 torv. of which Pittsburgh was then the. commercial center, and the men who organized this branch bank handled much of the proceeds of these sales, pending the turning over of the money to the gov ernment. Un to September 30.

1804. after! about nine months' operations, this branch bank turned over to the government at various times aa proceeds of land sales 93. In three years the proceeds amounted to $1,190,277 27. The bank proved to be of great value to the community, and It had a successful career until February, 1818. In the latter year a branch of the Bank of the United States was established in this city and the deposits of the government were transferred to it.

The first bank organised in Pittsburgh by home capital was the Bank of Pitts- l. 1 fo.A TT burgh, in February, 1810. It was sanc tioned by the act of Assembly of 1808, but not chartered, for the reason that the getting of a charter In those days was not an easy matter. The organizers of the Bank of Pittsburgh intended to do a banking and insurance business, and one of its avowed purposes was to ad vance funds to manufacturers. The commercial and manufacturing interests of the community were successful, but they often required currency and credit when these were difficult to obtain, and the object of the new institution was to supply this need.

The affairs of the Bank of Pittsburgh moved along smoothly nntll the Legislature passed an act prohibiting it from doing business unless it should be regularly incorporated by that body. Accordingly the bank ceased, officially, to' do business, but maintained its existence and continued both banking and insur-j ance business as "The Pittsburgh Manu-j lacturing Company." An application to the Legislature for a charter failed, but tins nad no effect In lessening the public confidence in ita strength and honor. By act of March 21, 1814, it was finally incorporated, with a capital stocks of j.ne rarmers and Merchants oank or rittsburgh was incorporated at about the same time, with a capital of A ivn Early Bank President: William Wilklns has been awarded chief credit for influencing the Legislature to incorporate the Bank of Pittsburgh. He was an Important citizen of the com munity at the figured largely in the later life of both city and nation, becoming Judge, a member of Congress, a United States senator, member of President Tyler's cabinet and minister to Russia. His name led the directors who, chosen In November to manage the affairs of the Bank of Pittsburgh, had opened books on May 10 In the office of tne Pittsburgh Manufacturing Company.

In 1824 It was re-chartered bv the Legis lature for 15 years without increase In capuai. in lad a third charter was granted, this time with the privilege to urereasc ma capital to $1,200,000, and With a provision that 5 per cent of the new stock issued should go to the school fund oi me siaie. When the Bank of Pittsburgh was reorganized William Wilklns was made president, and served -from 1810 to 1819 John Darragh succeeded him and served until 1S36. The three succeeding presidents were John McDonald, William H. Denny and John Graham.

In ISfiS Harper was elected president and ovrveu until me time of his dentd April 5. 189L Mr. Harper's entire tenure onice covered 60 years in this one in stitution, a record seldom surpassed In me canning or any other business. From its organization in 1810 and its Incorporation in 1814, the Bank of Pittsburgh remained a state Institution nntll October 23, 1899, when it surrendered its state charter and incorporated under the national banking act It was per- its oia name, and its of- Proud boast of the old institution that it ouspenaea specie payments This claim has been dlsoutert. it being asserted that during the panic of 1837, in compliance with a request made at a public meeting that the banks suspend such payments, there was a brief period during which it acted with other banks all over the country.

When the national banking law- was passed it became unprofitable for state banks llnue the Issuance bf circulating notes au us outstanding notes In specie. Trust Company Introduced. It would be largely a matter of names and dates to go into details concerning the organization, merger and retirement of banks, state and national, nf suing half century In what la now the bcuub appnes to the country as a whole east nf an a It world 1 had shipped its first lnart nt freight by rail. Among local financial concerns the Dollars Savings Bank is unique in that it was organized without a dollar of capital stock, and remains with- out capital stock today after 56 years of successiui operation. The object of the organizers of this bank was entirely al-truistic, the entire profits going to the depositors, in the shape either of dividends payable semi-annually, or In additions to reserve fund to further safeguard the interests of depositors.

A half -century ago people were probably no more or no less public-spirited than they are today, but then as now, it may be assumed that the axiom, "business Is business," held full sway. It is not surprising, therefore, to learn that the organizers of the old Dollar Savings 1 nnrc 1 1 ruin CI a hit H.IW-tlt .1 Bank were looked upon as a bit Utopian by the ordinary hard-headed business man. He asked, "who is going to give his time and talents to taking care of and investing the savings of others, when there will be no stock upon which dividends will be paid?" Sluch from Little. The feature of the new bank, however, which attracted m6st attention and not a littlo scornful tossing of heads was the proposal to accept a sum as small as one dollar with which a depositor could open an account. Perhaps the expression "peanut banking" had not yet been coined to define the diminutive and trifling; but the critic of the "Old Dollar" certainly thought the organisers were dealing in "small potatoes." But these organizers had been Sunday-go-to-meeting youths, and (If it is not an anachronism) they had probably sung Little drops of water.

Little grains of sand. Make the mighty ocean And ths beauteous land, or perhaps Poor Richard's sayings had large circulation in this frugal Scotch-Presbyterian community, and the admirers of the homely philosopher appreciated the value of small savings. At all events, the Dollar Savings Bank grew apace, and it came to pass that the number of its depositors and ti aggregate sum to their credit exceeded the total 1 of any similar institution west bf the Aileghenies. Its prosperity soon attracted and seven years after it opened its doors for the humble depositor, or in 1862, the Pittsburgh Bank for Savings was organized, and four years later, in 1866, the Peoples Savings Bank came into the local field, where they continue; today to occupy an honorable and prosperous place. The people of the United States are sometimes held up as an example of heedless extravagance; a happy-go-lucky people who take no thought of the morrow.

This view is not supported by savings bank statistics. According to a report compiled by the comptroller of the currency, who made a special inquiry into the subject two years ago, there are 1,703 distinctively savings banks in the United States, in which 8,831,863 separate depositors have to their credit the sum of $3,713,405,709. These figures, however, do not begin to represent the frugality of the people' Of this country. Nearly every kind of banking' Institution has its separate savings department. About the time the comptroller was making his inquiry, the National Monetary Commission also took up the subject, but Included in Its Investigation the number and amount of savings accounts in all kinds of banks.

It reported that there were in the United States and island possessions no less than 18,245 banks which received savings accounts. They had 14,894,696 Individual depositors, and the sums to their credit foot up the magnificent total of $5,678,735,379. Quite a tidy sum laid up for a rainy day. Some Jjeading Local Banks. Many of the national banks of Pitts- -burgh today are reorganizations of old state institutions which were organized half century or more ago, and which, when they entered the national system, retained their original names.

One of the oldest of these is the Farmers Deposit National, which was organized in 1833 more than three-quarters of a cen- tury ago and which not only outgrew many homes until It built the magnifi cent structure in Fifth avenue, but has outgrown Its name. It Is now one of tha great national banks of Pennsylvania, and It has more manufacturers, mer- chants, traders, among It customers than it ever had "farmers." The Echange National Is another old- timer, having been organized Just three-quarters of a century ago, which event celebrated last month. It became a member of the national system In 1865, and it is one of the few financial institutions In the city which has not merged other bank nor been closely affili- (reputation by which it is characterized. Exchange National for half a cen- tury was usually referred to as an "ultra- conservative bank." Today, under a practically new management, it la being referred to as a "progressive conservative," If that is not a coniradltlon of terms. The Unln National began business ln 1857 and became a national bank in 1864.

This bank Is noted for several things. In the first place it has had only three presidents In all Its history. First there was John S. McCune, one (St the found ers, wno served until the time of his death. Then Robert S.

Smith, who was cashier, succeeded to the presidency, and he retired last year to give place to John R. McCune, a son of the founder. In the second place. the Union National has always taken a leading, if unostentatious, part as counsellor and assistant in times or financial and Industrial crises. On such occasions everyone would turn to Mr.

Smith for counsel. He was an opti-most, but he seemed to hold this quality in check during times of exceptional prosperity and give it full rein during times of adversity. Other financiers had full confidence in his experience as a banker and ln his judgment as a business man. The late C. F.

Dean, for many years cashier of the bank, used to say with pardonable pride that the Union National always gained deposits during periods of financial storm, because it was a sort of safe harbor. Records to Be Proud Of. In the early days, before the passage of the national bank act, it was custom- ary for financial Institutions to select a distinctive name, which would suggest the particular field that was to be appealed to. This policy probably Influenced the organisers of the Masonic Bank in 1869. It continued under that title until 18S3, when It entered the national system and is now known as the Lincoln National.

Its growth and prosperity has been entirely from within that is. It has never absorbed any outside bank nor built up Its surplus by the sale of new capital stock at a high premium. The Second National, as Its title indicates, was an early entrant Into ths new system, being organized as a national bank ln 1863. Under the presidency of the late James IT. Wlllock it became the legal reserve agent of numerous country banks, and itla still prominent in this field.

The Peoples National Bank was organ- Contlnned am Fourth Fk. This Section, lion of $5,000 each, and these certificates licial. tlm're becae "The Bank of Pitts-mav ha tonilo r. that loarlncr hmien burgh, National Association." Tt la became popular with the public, because' they were the first issue of bank notes In the history of the country that were "good" in any state, and they did not lose their exchange value even if the bank which issued them went bankrupt, because they were secured by government bonds held Washington, and before a note could be Issued the bank was BUSY MOMENT compelled to deposit a redemption fund with the United States treasurer. No longer did the banker have to go through his cash drawer at the send of the day's biisinesi anff Separate the sheep from the goats the notes of good banks and the notes of weak banks and the individual felt no uneasiness when he heard of a national bank failure In any part of the country, that he might have a note In his possession that had been Issued by the failed bank.

He knew that all notes Issued by all national banks were equally good, whether the banks were open or closed, and he knew he had no state bank issues, because theee notes had been driven out of circulation by the 10 per cent per annum tax imposed by the government upon all issues save those of national banks. While there have been many amendments to the national banking act as originally enacted, experience has proved that that --hastily constructed, and undai tha cnlir rt ihn crr-on ftttt r-r i 1 a thai confronted any nation, was a work but from 1863 down to the present day.j it has been impossible to obtain agreement upon a substitute for the old "war measure." Specie Payment Resumed. Specie payments in the United States remained suspended from 1861 to January 1, 18T9, but during many intervening years there was constant agitation for the passage of an act of resumption. This was miaiiy accomplished January 1875, and 1 ikts w9 th Hat. tnr actual resumption to begin.

The old Oazette was a sturdy champion of resumption, displaying characteristic editorial optimism over the ability of the nation to accomplish whatever it attempted on the side of honesty and good faith. In advocating the passage of the Resumption Act, a series of editorials appeared in this paper strongly supporting the attitude of John Sherman, the famous Senator and Secretary of the Treasury. The editorials revealed so much intelligence and familiarity with the subject that they were widely copied by advocates of resumption, and combated by the few who permitted their fear of another financial crlsla to cloud thetr Judgment. Some of Tha Gazette's contemporaries accused it of having John Sherman on its regular editorial staff. While that would have been an honor, it was not the fact.

The "resumption" editorials were written by a regular member of the staff, the Rev. Jonathan Van-note. The present writer of this sketch, then an apprentice in The Gazette composing room, 'as often present when the editorial articles which attracted attention were wrilttn. In those days there were no skyscrapers, with stea-n heat, electric lights, swivel chairs, and other conveniences of a modern office. The big egg-shaped stoVe, the ample coal box, and no less ample wooden box half filled with sawdust and toby-stumps, were among the familiar furnlshment of the average composing room, and inasmuch as thajatter was the one place in a daily morning newspaper office that was always oc cupied, it was, in winter, the most com- fortably heated room in the buildlnir.

It not infrequently occurred that Editor Vannote would supply a vacant city pulpit Sunday morning and come from the delivery of the sermon to The Gazette office to write his leader for Monday morning's paper. As the fire in his sanctum stove would not be lighted until later in the day, he would sometimes to the composing-room if the morning were frosty. Seated In a sagging split-bottom chair, with his feet on the coal box near the stove, and a pad of paper across his knees, he would write his leader In support of specie resumption, or some other measure of public welfare. Confidence Is Restored. As the date approached for the actual resumption the banks prepared to meet the run of customers who would desire to exchange paper notes for hard coin, and trades-people, theaters and others turned.

95 Is to mcraent reiatea oy oia-time of genius. Financial economists are prac- Kaf JPr ty(plcaJ; Itlcally agreed that we have now out- 1 tteburgh Clearing House Associa- gfown tha 6ystera; tnat modern business n.a? establlsheJ when methods require a more scientific a tall in the volume of commercial trade; paper or com in tnis country, ana the bulk of individual transactions was settled by personal barter of products or services. Birth of the Treasury. The Gazette was well along in its third year before the act establishing the United States Treasury Department was passed, and It recorded the appointment of Alexander Hamilton as the first secretary of the treasury by George Washington. There were no banks In Pittsburgh until long after this newspaper came Into existence, and it is a curious coincidence that in the Tery year that The Pittsburgh.

Gazette was born, Kobert Morris, the financier of the Revolutionary war, made an address In the Pennsylvania Assembly In advocacy of the need of a bank la this state. The first bank chartered by the Assembly of Pennsylvania was the Bank of North America, located in Philadelphia, and still doing business. This institution was originally chartered by Congress In 1781, but doubt as to the authority of the Continental Congress to grant a bank charter having been entertained, application was made for state incorporation. This was granted, but hostility became so active that the act of incorporation was repealed In September, The bank continued to do business under Its federal charter, however, and finally through the efforts of Robert Morris a new act of state Incorporation was passed March 17, 1787, a year after the first Issue of The Gasette. The Days of Bank Note Shaving.

It Is Improbable, however, that the notes of this bank found their way Into circulation In Western Pennsylvania until many years afterwards. Even when state banks became numerous in later years, their note Issues were current at par within a very narrow territory. Note-e having became a common and lucrative practice. A Pittsburgh financier, now retired, who amassed a large fortune, laid the foundation for his millions by dealing in bank note issues just prior to the outbreak of the Civil war. In the early days of steamboattng there was an Immense commerce between Pittsburgh and down-river towns, and the paper "money" issued in one section would find Its way Into another, although It was almost invariably quoted at a discount when "away from home." The financier referred to, when a youth, would visit the Pittsburgh banks and buy from them notes of banks they had received that had been issued by banks in Cincinnati, Louisville and' other southern cities.

He bought these notes at varying dis count, paying therefor with notes of Pittsburgh- banks at face value. With his grip full of notes of southern banks, he went by boat on a tour of southern cities, where his newly acquired notes were redeemable or exchangeable at par. In those cities he found banks carrying In their vaults notes lsued by Pittsburgh banks which, being: "away from home," were quoted at a discount. The Pittsburgh bank notes which he found In Cincinnati he bought with Cincinnati bank notes which ha had purchased at a discount in Pittsburgh. In Louisville he exchanged Louisville bank notes for Pittsburgh notes, and so on throughout his trip.

Then ha came back with his grip filled with notes of Pittsburgh banks, which had risen In exchange value with every mil that brought him nearer the bank of Issue, and repeated the transaction. Troubles With Currency. Jt m.ia ui ua.a rtjr Business roan was eompell a to provide himself with a. bank ote de actor order to distinguish gen-! Vine from counterfeit notes, and at the aame time he had to familiarize himself with the relative exchange value of notes of scores and hundreds of banks located In every state and city in which his customers might transact business. The losses through depreciation of currency In the hands of Innocent holders were enormous.

In these days, when every coin and piece of paper money passes from hand to hand without hesitation at par, and with equal confidence In its value, whether Issued by a bank in Maine or Minnesota, in California or Connecticut, it is difficult to imagine how the business man of former years accomplished anything in the way of trade expansion, when there was often ground for suspicion concerning notes issued in his own county. Even after the development of a statr banking system In the more procressive commonwealths, currency troubles were far from being ended. Bank failures were not only numerous, but solvent institutions were frequently compelled to suspend specie payments, and legislative relief bills for banks whose charters had been forfeited by this act were a common occurrence at every session of the Assembly immediately following a financial crisis. The present Bank of France, which is regarded as the best managed financial Institution in the world, was established by the First Napoleon in February, 1808, J4 years after the first Issue of The Pitts-tnrgh Gazette. It the direct offspring of the necessities of the French (evolution.

Apparently, it also required a great civil conflict to give birth to a national panking system of the United States, to scotch the Innumerable brood of wildcat gheny mountains. But Bhortly after theated 'wlth slmilar institutions. After a Civil war a new kind of quasi-banking banls nas been ln existence for many institution made Its aDDearanc thi. years it usually acquires a well-defined was the safe deposit and trust company The name adopted was perfectly ilium-'The AwL -ft foreclosure proceedings. Fortunes in vested In these securities shriveled up and disappeared.

The national credit fell to the lowest cbtt sthce the ClvtJ war, because as fast as gold was taketf-lnto the federal treasury jt was drawn ojifcby the endless chain ut luiraU-teJwliir turner monejri For the first time in an'era of peace there was a run on the United States treasury, and the "spectacle of the apparent helplessness of tlia government paralyzed our credit at home and abroad. Even the earth seemd under a blight, and a succession of crop failures added to the general distress, which embraced a more numerous class of ettisens than in any other period, save possibly the darkest days of the Revolutionary war. The battle was foushv however, and the victory won. but all doubt on the currency question was not absolutely removed until on March 14, 1D00, when President William McKinley affixed his Signature to the bill entitled "An act to define and fix the-standard of value, to maintain the parity of all forms or money Issued or coined by the United States, to refund the public debt, and for other purposes." Among the "other purposes" was a provision reducing the minimum capital of national banks to $25,000 in towns not exceeding 3,000 inhabitants. Under this provision small banks increased rapidly, until today the country village enjoys banking facilities which are as adequate to its needs as are those of the largest cities in the land.

Such In brief is a history of the evolution In currency In the United States during the 125 years since the issue of the first copy of The Pittsburgh Gazette, Growth of Banking Habit. With the development of a universal currency, circulating at par In all the states of the Union, came a development of the banking habit that has no parallel In any other part of the globe. The introduction of paper money In the first instance was prompted by a desire for economy In the use of gold and silver, and In the second Instance to put Into mobile form stored-up wealth. Another step along the same line of development was the utilization of the bank check as a substitute for paper money, which, as already stated. Is a substitute for real money gold.

So universal has the bank check habit grown that careful Investigation shows that per cent of the business of the United States is settled by the exchange of checks between buyer and seller, while tha remaining 5 per cent represents the Instant settlement of minor transactions between individuals. The "clearing" or settlement of these checks In ths leading cities In a single week average a total In excess of the sum of all forms of coin and paper money In the country. While the bank check was a great labor-saving Instrument for the individual. It entailed so much additional work upon the banks that necessity compelled tha Invention of another labor-saver to handle the checks, and American genius evolved the clearing house. Albert Gallatin, born in Switzerland In 1761, but who came to Western Pennsylvania In 17S0, and became secretary of the United States treasury under Jefferson In 1801, credited with suggesting the general plan for a clearing house.

It was this same Gallatin, by the way, who, after the panic of 1836, at a conference of New York bankers called to consider the setting of a date when they should resume specie payments, moved an amendment the resolution that the banks should "resume tomorrow." The amendment carried, and the banks resumed specie payments on the morrow without trouble. The banks were not so prompt, however, in adopting a plan for a clearing house, and the first organization of this- kind, composed of B2 New York bankers, was not perfected until September 13, 1853. The first "clearing" was made in a basement of 14 Wall street on October 11 of the same year. Since then clearing houses have been established in more than a hundred cities and towns in the United States, and they clear or settle bank checks and drafts representing billions of dollars every week in the year. The Pittsburgh Clearing House.

When a check passes through the clearing house it must be a "good check," that is, there must be money on deposit manager in settlement of debit balances, but these certificates circulate only among members of the association; and then only In settlement of clearing house debits. If- it were not for bank checks and drafts It would not now be possible to conduct the commerce of the country, and if it were not for clearing houses, it would be impossible ever to catch up with the enormous volume of financial transactions. Even the well-to-do original subscriber of The Pittsburgh Gazette of 125 years ago had no bank account, for there were no banks in Western Pennsylvania. If he was the exceptional owner of gold or silver coin, he was compelled to keep it In a strong box at home. If he desired to pay or collect a debt In the adjoining township of county, he was compelled to make a personal expeauion, ana proDaoiy went well armed.

Today a bank account, a fountain pen and a check-book, together with a two-cent postage stamp, will settle a financial account in any part of the United States, thanks to the facilities furnished by our banks and trust companies. Pittsburgh' First Bank, The Pittsburgh Gazette, now celebrating the One Hundred and Twenty-fifth anniversary of Its birth, was IS years old before this city was in the enjoyment of any banking facilities It is needless to say that banks were unknown to the west and south of us at that time. It was in March, 1803, when the population of Pittsburgh was about 1.700, that some of the prominent business men of the city started an agitation In favor of a bank. A public meeting, was arrange i for and the call was published In The Gazette, inviting "the freeholders and other inhabitants, householders, to attend a meeting of the corporation at the court house on Saturday, the 26th at 4 o'clock p. m.

In ore''" to take into consideration a prop" of the directors of the Bank of Pennsylvania for establishing a branch of their bank within this borough, provided it is approved by the corporation." The Bank of Pennsylvania had been established at Philadelphia by act of the Legislature of March 30, 1793. The directors of tliis bank had authority to establish branches anywhere within the state that they should see fit. If the consent of the town or borough should be secured. It was a branch of this bank that was desired for Pittsburgh. The proposition was favorably acted upon, but probably not without some opposition, for it was not until January 9, 1S04, nearly a year after, when the matter was first formally considered In town meeting, that the "office of discount and deposit at Pittsburgh" was epen for business.

The Bank of Pennsylvania selected Its own directors of the Pittsburgh branch, and they were: John Wilklns, Presley Neville, Oliver Ormsby, Jamea O'Hara. Jams Berthaud, Eb-enezer Denny Joph Barker, Oeorge Stevenson, John Woods. Thomas Baird, John Johnson and George Kobineon. They chose Mr. Wilklns for president.

Thomas Wilson w-as gent here to bs cashier. The location of the bank was in the two-story stone building on the east side of Second street, now Second avenue, between Market and Ferry streets, which was destroyed In the great fire of 1845. The federal government at that time was selling a great many thousands of acres of public lands la tha western terri-, i debits were settled daily. John D. Scully, then cashier of the First National Bank, was an ardent supporter of the government, and his institution was the first to receive a consignment of the new bank notes In this city.

It happened that on the day of this arrival the First National Bank was a debtor on balance to the other banks. With pardonable pride, as being the banker to give un avivernnrenis new ctir- rency, Cashier Scully tendered the crisp uma un oi me creaitor banks. "What kind of wallpaper Is this?" was the scornful question of the representative of the creditor bank, a state institution, as he brushed aside the notes. "It is Uncle Sam's new money," was the response. "Well, we don't recognize it as money.

We demand gold or silver coin," responded the state bank man. "You will take this or nothing," declared Cashier Scully. "And if you refuse it your action will be made known throughout Allegheny county within 24 hours." Pittsburgh had already established reputation for entertaining more federal troops on tne way to ana from the war tnan any otner city the land, and President Lincoln had conferred the title "State of Allegheny" upon this county. To refuse to recognize tha new government currency as a legal tender for debt, and to have such action advertised broadcast throughout the "State of Allegheny" was a prospect that no Individual or institution could contemplate without fear. The "wallpaper money" was meekly accepted and never again came Into question.

The Days of Inflation. The Immense inflation in paper money which followed the outbreak of the Civil War promptly brought into operation "Gresham's law" the inferior driving the superior money out of circulation. Gold and silver coin went into hoarding or was shipped out of the country. A suspension of specie payments was Inevitable, and this momentous event oc curred, nationally, in December, 16L Pa- renthetically. It might be remarked that a suspension of special payments had been a frequent occurrence in previous years by banks located in a particular city or state; but before December, 1861, the most general suspension was that following the panio of 1S36, when even the strongest New York banks were compelled to suspend the redemption of their notes In coin.

To take the elace of the silver coin which bad circulated in denominations ranging from the thin 3-cent piece to the heavy Mexican dollar, the government was compelled to issue pieces of paper representing equivalent denominations. These were almost immediately dubbed "shin-plasters," because of their size, which varied with the sum represented, and in some respects resembled the trading stamps or tobacco coupons of today. Their first introduction luawjis as to tne purpose of this class of financial concern. It la true that the Girard Trust Company of Philadelphia, which this spring celebrated the 75th anniversary of its birthday, was incorporated in 1836. but it was manv that date that what is today described i company cams into the field.

muti imposing reature of the relatively modern trust company was a huge, Impregnable vault, in which Individuals and corporations could store valuables te be safeguarded from fire, flood, insurrections and Individual theft A second (and at the beginning minor) function of such iu0uiuuuu was to act as trustee for individuals and estates. This ultimately became the chief function of the old-line nl they soon usurped tne neld that had been occupied exclusively by the private banker of the old school. i 5 trust conpanies became the legal trustees of corporations for issuin" mortgages, and the transfer agent and registrar for issuing certificates of stock when ownership the same changed. Finally, to all intents and purposes, they conducted a regular banking business receiving deposits, handling checking accounts and making loans. Of all the states ln the Union Pennsylvania has been conspicuous for the growth of the trust company.

Pittsburgh's Big Companies. Tha first Institution of this klntf organ-ized in Pittsburgh was the Safe DeSsU and Trust Company of Pittsburgh, whicn was chartered in 1867. It was not until November 27. 1886. that the second institution of this kind, the Fidelity TlUe and Trust Company of Pittsburgh wa organized, and these two institutions were the sole occupants of the local field for years.

On October 28. 1889, The tTnirin Trust Company of Pittsburgh was chi, tered. and this institution today has the distinction of carrying the largest percentage of surplus to capital of any bank or trust company ln the United States. It has paid annual dividends aggregating 86 per cent on par, and this year raised the rate to 25 per cent quarterly. The growth of trust companies In recent years has been one of the most remarkable developments in the financial hlstorv of the country, A third distinctive type of financial Institution is typified in the Dollar Savings Bank of Pittsburgh.

This bank was organized June 7, 1855. just four years after Pittsburgh (which now furnishes more tonnage than any other city in the 4T.