Summit County, Ohio - Chapter 10: Banks and Banking, 1908

Chapter 10: Banks and Banking

History of the Banks of Sii^mmii County - Banks Inadequate - Akron's Financial Reputation Akron a Large Borrower - Panic of 1904 - Clearing House Statement - Future Prosperity Certain.

By Jos. S. Benneb

In 1845, when Akron -was a town of probably 1,500 inhabitants, the Bank of Akron, a branch of the Ohio Safety Fund system, was organized with a capital of $50,000. This was Akron's pioneer bank and proved a very great convenience to the business men of the surrounding community. It survived until 1857, when it went into liquidation, having become involved in the financial embarrassments of the Akron Branch Railroad.

In 1855 George D. Bates, with Gen. Philo Chamberlain as a silent partner, opened a private bank on the west side of Howard Street near the present site of B. L. Dodge's furniture store, afterwards purchasing the old Bank of Akron's stand on the opposite side of the street, and where under the name of Bates & Co. the bu.siiness was continued until 1863, when it was merged into the Second National Bank.

In 1863 the First National Bank, with a capital of $100,000, was organized with T. W. Cornell as president, M. W. Henry, vice president, and W. H. Huntington, cashier.

In 1870 the Bank of Akron, with George T. Perkins as president, Alden Gage as cashier, was started, which in 1888 was merged with the Second National Bank, taking that name, with a capital of $275,000, and a surplus of $22,000, and using the rooms of the Bank of Akron in the Academy of Music building, its present site.

In 1872 the Citizens' Savings and Loan Association was organized, which in the panic of 1893 had to close its doors, but which was soon after reorganized into the Citizens' National Bank, which continued until 1903, when it was merged with the Second National Bank.

In 1888 the Akron Savings Bank was started; in 1890 the People's Savings Bank Company; in 1897 the Central Savings Bank Company; in 1900 the Akron Trust Company, and the Guardian Savings Bank Company ; in 1901 the Dime Savings Bank Company, and the Security Savings Bank Company, and in 1902 the Dollar Savings Bank Company.

and the Central Savings Bank Company, which latter bank had some months before acquired the business of the Guardian Savings Bank Company, which went into liquidation. The new bank purchased the building of the Akron Savings Bank, which failed in April, 1904, and refitted and remodeled it into its present shape.

In 1905 was started the South Akron Bank- ' ing Company and in 1907 the Depositors' Savings Bank Company, the former locating in the extreme southern part of Akron, near the street car barns, and the latter purchasing the building and fixtures of the Security Savings Bank Company, which in April, 1907, was merged with the People's Savings Bank Company, across the street.

In 1903 Akron boasted of twelve banks, vfiih capitals of $1,22.5,000 and depasits of $7,300,000. Now, through two consolidations, two absorption and one failure, there are but nine, with a total capitalization of $950.- 000, and total deposits of $8,200,000, a reduction of capital of $275,000, with an increase of nearly $1,000,000 in deposits.

Despite the sensitive feeling still rankling in the minds of many, Akron people really have cause to be proud of the record of her banks. In the sixty years of her banking history there has been but one failure, and that wholly through mismanagement.

We have read from time to time of bank embezzlements, of defalcations and rascalities of officers, but Akron has had none of that and can say that the men who have been entrusted with the care of the wealth and sa\angs of her people are, and have been at all times, faithful and honest. The mistakes that have been made were made through lack of good judgment and incapacity only. It is indeed a remarkable fact, taking into consideration the length of time - over half a century - the wea.kne.ss and culpability of man. and the numerous panics through which they have pa.s,sed. that the experience which we in 1904 went through is the sole and only one to which hisrtory can point.

Banks Ixadequate

Akron's banks, however, with all their $9,- 000,000 and more of resources, are far from capable of taking care of the financial needs of its manufacturing and mercantile industries. In fact we would warrant the assertion that 80 per cent of the money required by the large concerns of Akron is furnished by outside banks.

To the stranger to our local conditions and to the unthinking, such a statement seems absurd, but it is true, we believe. A simple explanation of this is as follows :

The largest amount that any Akron bank can legally loan to any one concern is 10 per cent of its capital stock, which means the Second National Bank can loan $35,000. the Firet National Bank, $20,000; the National City and the Central Savings and Trust Company, $10,000, and the others only $5,000. This being the case and very few of these concerns doing business at more than one bank in the city, they are compelled by necessity to go outside, especially when at certain periods of the vear some of them borrow individually from $100,000 to $1,000,000.

This very apparent disproportion of the banking capital of Akron to the amount of business transacted through these same banks is well illustrated by the totals of its bank clearings as compared vnth those of Youngstown. Canton and Springfield, its sister cities, and their relative banking capitals.

As is shown, Akron, with only $950,000 banking capital, does business of $34,700,000, a larger volume than Youngstown. with $3,- 250.000 capital, and more than twice her resources and wealth: while Canton, with larger capital, and 25 per cent more of resources, does only $27,386,000, or 25 per cent less in actual volume of business.

This unusual condition existing in a city the size of Akron is partly accounted for by the extraordinary growth and success of the larger industries that have grown up in our midst, far surpassing our native wealth and consequently our banking resources, and they have necessarily been forced by such conditions to seek financial aid in the large money centers.

These same concerns and their necessitias have indeed made Akron very prominent in financial circles. Go to New York, Chicago, Philadelphia, Boston, St. Louis, Detroit and inquire at the banks about Akron, what nature of a place it is and what is its reputation. They will immediately reply that they do a great deal of business with Akron concerns, that it is a very enterprising, hustling, manufacturing city, and they will surprise you with the fund of accurate information they possess about it and many of its concerns.

Akron today stands financially relatively stronger than it ever stood in its history. While its growth, which has averaged over 60 per cent each decade, has, as has been said, outstripped its financial re^ourcas, still it has prospered, and that is the main thing.

But these same New York, Chicago and other bankers, while praising Akron and its concerns now, do it with a more or less reluctant grace, for not a few of them have had experiences which still rankle in their memories.

Akron A Large Borrower

For the reasons explained, Akron has been a large borrower. But during the period of 1900 to 1903, when the boom was on and business of all kinds was at its height, Akron was no whit behind in its quota of promotions; new enterprises were started by the dozens; where one line of trade proved a success there was always plenty of over-zealous promoters to form new companies that were sure to make equal profits. The result was a number of mushroom concerns sprang up and began doing business, largely on borrowed capital. The local conditions with their lack of funds, excepting for established credits, were more or less of a handicap, however, but they "were not to be stopped. Times were too good and money too plentiful elsewhere. Everyone, even the banks, had the fever for speculative explorations and the fences of conservatism were down.

Such conditions soon provided opportunities for a number of persons who made it their basiness to furnish corporations having insufficient working capital or weakened credits with funds for their needs. For this they charged a commission varying with the financial necessities of each individual concern; the one that needed it the worst was compelled to pay the highest commission.

Banks in surrounding country communities were flush with money and with no local opportunities to lend it, and they welcomed gladly anything that looked like a good loan.

These Akron brokers, by assiduous writing and many rosy representations of the worth of the various concerns they were endeavoring to help, were thus able, spurred on by the large commissions in sight, for a number of years to bolster up their weak-kneed customers.

Panic Of 1904

When the financial depression of 1904 struck us and conservatism became the rule, these countrv' banks began to ask and then demand their money. The result was the failure of all those who couldn't provide the capital which should have been put in when first needed, numbering among these unfortunately several old established concerns that had long been considered responsible, but who had gradually been dropping behind in the race with their younger and more ag.gressive competitors. Likewise it caused the putting out of business of all the money brokers.

lire of these concerns, nor yet in the loss of their business to Akron, but in the fact that their failures caused a large financial loss to many of those outside banks located all over the country, and who had for years been loaning to Akron concerns. These losses, all coming within a few months, so shook their confidence in Akron and Akron concerns that for two years afterward a borrower from Akron, no matter what his standing, was and even is now, regarded with suspicion and distrust by outside city and county banks.

As was said these memories still rankle with them, but we are glad to state the unprecedented success of a number of our present concerns has helped very materially to redeem Akron's reputation and to restore it to its old position.

No<w, in 1907, there are probably not more than two concerns in the city who are not able to stand solidly on their own financial basis, and these two are not in a position where they are dependent on brokers. They require a reorganization with larger capital, and this will probably be provided. Many local industries report the largest and most pro.^erous year of their existence, some stating that the volume of business is 25 to 75 per cent greater than any previous year. To these the outlook is bright, despite the pessimistic views of many. But the coaservatives, means every succ&ssful banker and finaaicier, regard the trend of business, which has shown unmistakable signs of reaction the past six months, as the best remedy that could possibly be given for an over^ervous and too prosperous condition. As in 1892 and in 1903 prosperity has about reached the realms of fantastic earnings and values, and it behooves the careful man to husband all his resources, to prepare for a period when he may not do much more than half the business of this year, which means a great deal less profit and perhaps a loss.

If such a period comes he is watching for it and is ready; if it does not come, then he is in just that much better shape to take advantage of next year's opportunities.

Clearing House Statement

In the following statement of the clearings of Akron, since the organization of the clearing house, can be seen the effect of a panic or financial depression :

It appears that the clearing house started its records March 1, 1892, so that in the year 1892 only ten months' business is recorded. This amounted to over $11,000,000. But next year when the panic struck the country, and in 1894 business decreased - -figuring the year 1892 as a possible $13,250,000 - at^least $3,- 300,000, nearly 25 per cent.

'During the years 1895-6-7 business remained apparently at a standstill, with $13,- 000,000 each year, but in 1898 it picked up and gained steadily until 1903, reaching a maximum of $37,000,000. a gain of nearly 30 per cent in six years, which is surely a great record.

But again in 1904 came a financial depresi-iion which lasted two years, then a large gain in 1906, with a .still larger one in 1907, the first six months of 1907 showing $18,000,000, against $14,000,000 in the same period of 1906.

The clearing house reports show the actual amount of bu.sine.s.s as represented by the checks of the customers of the various banks that pass through the clearing hoase. It does not represent the total amount of business done through the banks, as each does a large amount in currency over its own countei^, but it serves as a record which show.? substantially and as near as can be obtained, the total amount of business transacted for purposes of comparison year by year or with other cities, and answers every purpose.

Prosperity Certain

Akron's prosperity is certain now. Slack times may come and even a panic, but her concerns and her banks have demonstrated their ability to stand the test and will live through them and com© out stronger than ever.

While working out this prosperity, however, Akron's business men of the last generation have developed a peculiarity which it behooves some of us to sit down and think over. In the huiry-skurry of an aggressive, competitive business life, in the fight for the profits that at first came so slowly, but later came pouring into their laps they became so engrossed in the game that they forgot, or grew to care nothing for all other interests but their own. While, as before said, in benefiting themselvas they more or less helped to benefit their city, still what the city got was really nothing compared to the real results that might have been obtained had they given but a small part of their thoughts and energies to helping the growth and prosperity of Akron.

When approached to take a part in some public enterprise or matter important to the city, the excuse was always: "We are too busy; cannot get away. What is our city council and board of ptiblic service for? Let them look after such matters," etc.

By all this is meant, Akron has been woefully lacking in public-spirited men - business men, successful bankers and manufacturers who would take enough time and interest away from their own aff'airs to give to the welfare of their city.

The result Ls we have no chamber of commerce nor any kind of an association of business men, such as all progressive cities maintain, to look after the financial and industrial interests of the community. Such matters for years have been left to take care of themselves ; what comes our way, all well and good, if we get nothing or just miss something fine that we might have secured by a little personal effort, it does not matter much - no one seems to care.

Another thing Akron is lacking in is indi\'idual wealth. We have very few millionaires. What wealth w^e can boast of is owned by our rich corporations. But these same corporations are fast making wealth for their stockholders, and there is growing up among us a number of young, aggressive, prosperous business men who are the main guiding hands of these concerns and who in a very few years will be millionaires. Let us hope when they do come into their wealth they will use it, not as their forefathers before them have done, selfishly and fooli-shly, but in a wise, public-spirited way, which is the way of the truly rich and truly great.