[CHAPTER XLI]
Banks and Banking in Linn County
The history of banking in Cedar Rapids and Linn county may appropriately be divided into three periods, designated respectively, Frontier Banking, Country Banking, and City Banking, each possessing characteristics peculiar to itself and expressive of its time.
Frontier Banking was coincident with the beginning of business in Iowa, and continuing, covered the pioneer days, prior to the coming of the railroad, and its story is most interestingly told in his own words by Dr. S. D. Carpenter, whose youthful activities were a part of that early life, and who, in his eightieth year, writes as follows:
"Something over fifty years ago, as I recall the circumstance, I was greatly elated when the local printer at Cedar Rapids produced a card on which was imprinted 'Carpenter, Lehman & Co., Bankers.' At an earlier period of my life, I had read Æsop's Fables, but if I had, the story of the Ass who paraded in the Lion's skin did not seem applicable, and I mingled boldly with my companions, who, with equal effrontery, wore the same apparel. The 'protoplasm' from which the bankers of that day evoluted was plentiful and the environment all that could be desired. In a technical sense, it is quite true, there was no necessity for a bank and no business for a banker; there being no commerce, there were no bills to discount; but nevertheless, we established banks and became bankers. This was possible, because we had squatted down in the midst of millions of acres of a very fertile soil, in a genial and healthy climate. The product of land could not be exported, but a large immigration was pouring into the country, hungry for land and sufficiently numerous to consume all the surplus products. Land was the basis of all the live business, and the land agent and real estate dealer evoluted naturally into a banker. Land warrants took the place of commodities, dealers in the east collected them, and sent them to their agents in the west, who sold them at a large advance to the immigrants for whom they entered the land. The western real estate dealer ordinarily did not have capital enough to buy the land warrant, but handled it on a commission for his eastern correspondent until such time as he could accumulate from his profits sufficient cash to buy it outright. The price of the land warrant as purchased from the party to whom issued, was less than one dollar per acre, and was always sold to the buyer who used it at $1.25 per acre, that is a profit of at least 25 cents per acre, and with the continual increase of immigrants the business became of great volume and was correspondingly remunerative. Often the purchaser wanted more land than he had cash to pay for; then the real estate man sold the warrant at the rate of $1.25 per acre, took the purchaser's note for the balance at three per cent per month interest and held all the land as security. At this point, the real estate man became a banker. The first real estate firm in Cedar Rapids was that of Weare, Finch & Co., consisting of John Weare, Jr., Daniel O. Finch, and George Greene. They began business either in 1850 or 1851. I was offered a one-fourth interest in the syndicate for $500.00 and would gladly have taken it, but was unable to raise the requisite capital. Although unable to break into the crib, like many others, I hung around and was able now and then to grab an ear from the overflow. In other words, I became a customer of the bank. Being in the practise of medicine, I became familiar with all the surrounding country. When I discovered a choice location as regarded timber, water, etc., I went to the bank, bought a land warrant at $1.25 per acre, gave my note at three per cent per month, with a cast iron mortgage, and took my chances in the hope of selling at an advance before the maturity of the note. I was so successful in these ventures that I soon abandoned my profession and devoted my whole time to real estate. The real estate operator took advantage of the fact that many of the immigrants brought money with them, which it required time to invest. They had to look up locations to enter or to examine tracts which they desired to buy at second hand. Meantime, they did not wish to carry their money about with them and therefore they deposited it in the bank. The trade of the local merchants also increased, and they gradually became customers, and from these sources came the deposits. The volume of exchange was small, but the bank added something to its income by acting as agent for the payment of taxes for non-residents. The firm of Weare, Finch & Co. soon merged into that of Greene & Weare, D. O. Finch removing to Des Moines to establish a branch of the same house. Greene & Weare did not long enjoy a monopoly at Cedar Rapids. B. S. Bryan, who had been a clerk in their house, and had become familiar with the business, with a brother-in-law named Ward, from New Jersey, opened a rival establishment under the name of Ward & Bryan, some time in 1852 or '53. At that time, the immigration was so large that both establishments had all the business they could manage with their limited capital. It is not probable that either concern was very conservative, but the newer firm had but little capital, and the members branched out in the way of building new residences for themselves, and Bryan went so far as to buy a top buggy and a fine horse. This was going beyond the limit; the pioneer whose aspirations in the way of a pleasure carriage did not extend beyond a two horse wagon, became suspicious. Some renewals of paper in Iowa City and Davenport were refused them, and they had to close their doors. Then ensued a mild financial earthquake, which did not affect the town itself, because no one in the town, except the merchants, had any money on deposit, and they but little, but the sufferers were those who had put their money in the bank preparatory to buying land, and the bankers of whom they had bought land warrants on credit. Wm. Greene and myself, were appointed receivers. The assets amounted to about $35,000.00 and the indebtedness to something more. It took a year or two to close up the business and there was not a very great loss to any one.
"The town had scarcely quieted down from this excitement before it was struck by another financial cyclone of an entirely different character. We had a mail three times a week from Dubuque to Iowa City, the service being performed by four horse Concord coaches; it was before the day of the express companies. All money and other valuable packages came by mail. One day about 9 o'clock in the morning, the postmaster from Marion dashed into town at full speed, bringing the alarming intelligence that a mail pouch had been stolen from the coach in Marion, which had been found cut open and rifled and then concealed in some shavings back of a carpenter shop, near the hotel where the stage stopped to change horses and allow the passengers to breakfast. In the sack and near it, concealed in the shavings, were letters, and a package of land warrants, amounting to several thousand dollars. What was missing was not known. The land warrants were addressed to Greene & Weare. A crowd gathered about the bank and it soon became known that a money package had been in the pouch, but the amount was not given. Soon the report spread about that the bank had lost five, ten, or twenty thousand dollars, the sum varying according to the guessing power of the relator. Immediately John Weare and Wm. Greene started post haste to Marion, where they found a high state of excitement. The town had resolved itself into a committee of 'Sherlock Holmeses,' all devoting themselves to detective business. As a starting point, they were told that the money consisted of bank notes, issued by the Bank of Elgin, Illinois. Suspicion soon pointed to a disreputable blacksmith, living in a small frame house nearby. The stage had arrived at the hotel just before daylight, first driving to the postoffice, where the driver thought he had thrown all the sacks from the boot, but the small one had escaped his notice. The stage stood in front of the hotel and the horses were taken to the stable and fresh ones brought to supply their places. While this was being done and the passengers being at their breakfast, the stage was quite deserted, and it was then, it still being dark, that the thief got in his work. The stage proceeded on its way, and it was not till the carpenter shop, which stood just across the street from the hotel, was opened up for work, that a workman discovered the papers scattered about and finally the pouch itself. The alarm was at once given and the postmaster, as stated, carried the news to Cedar Rapids. It was not known that money had been stolen till Mr. Weare and Mr. Greene arrived. Soon after their arrival it became known that the blacksmith, quite early in the day, had been to the town grocery and much to the surprise of the grocer, paid up a standing account, and bought several dollars' worth of goods, for which he paid cash, with bills of the Bank of Elgin. These bills had not been in general circulation, and the grocer was making inquiries about them, which at once fixed suspicion on the blacksmith, who was immediately arrested and a guard placed about his house. He was searched, but nothing of an incriminating nature found. The house was then thoroughly gone over, and a five dollar bill of the Bank of Elgin found in the crack in the wall behind a looking glass. The man declared his innocence, and the woman said she knew nothing about the discovered bill. They had three children, a boy about thirteen, another eight, and a younger girl. In explanation of the bills paid the grocer, he said a man from Illinois, where he had formerly lived, had passed through the town the day before, and had paid him a bill of long standing in the bank notes that he had given the grocer. This story they stuck to, through all sorts of cross examination. Another diligent search of the house and adjacent premises was made, but nothing found. People living in the house nearest them, said that before daylight they had heard them up, and saw a light in the house, which was an unusual circumstance. The eldest boy, however, explained that he was raising a pet pig by hand, and that he was up so early because his pig was hungry and he had to feed it. Things went on in this manner till nearly night, when a new clew was struck. A woman living at the outskirts of the village had seen the eldest boy pass her house about eight or nine o'clock in the morning, carrying a sack, which apparently had something in it. No one had, however, seen him leave or return to his father's house, and he was there when the arrest was made, but the time that he was seen corresponded to about the time the grocer was being examined about the bills, and the detectives concluded that the blacksmith had his eyes open and surmised that they were getting warm on the trail, and had then sent out the boy with the money in the sack. The boy stoutly denied that he had left the house and that the woman was mistaken. So the matter rested for the first night. The next morning two other persons were found who had seen the boy and the sack at the time mentioned. Then the boy being hard pressed confessed that his mother had sent him out to a neighboring farm to get meal, but not finding any he had left the sack. Mr. Greene took the boy to the farm, but the people said he had not been there. Then he was brought back and again cross examined. He told numerous and conflicting stories, which I have forgotten, but succeeded in baffling the detectives the whole day. In the afternoon, Mr. Weare wrote me from Marion a very despairing note, saying that they were perfectly sure that the blacksmith was the thief, but that there was no clue to the money, which was the main thing, and suggesting that I bring three or four determined men and join him, and try by intimidation, whether it was not possible to frighten him into giving it up. I acted upon his advice and joined him in Marion about nightfall.