The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1916-08-11
INTERESTING STORY OF
BANKS ORGANIZATION
Founded By John Thompson After
He Lost His Representation
in First National
Bank
RY HOLLAND

such that there can De no doubt o.
the support of the stockholders of this
proposition The increased capital will
rank the Chase among the largest o.
American banks so far as capitalize.
ton is concerned. Presumably the
stockholders who are to receive the
additional $4,000 shares at par will b.
able to pay for it through their pro
portionate ownership in the surplus
AS the stock of this institution is
now quoted at $3.50 share, the in
creased capitalization will probably
reduce this by one-half. Nevertheless
the stockholders stand to make a
handsome profit on the transaction
although the profit is more apparent
than real, since they are the owners
of the surplus They can, however
realize upon their stock, and that is
something they cannot do upon their
surplus unless there were division.
The transaction can be spoken of as
the highwater mark in the success OF
an institution which was established
by reason of a quarrel and for years
carried on a fair, but not very pros
porous existence upon a small capital
The story may be worth reporting be-
cause it can be discovered not only
some of the modern tendencies of
American banking, but also the rela
ton Of some men who had no great
banking experience to this institution,
as well as the relation of others who
had unusual experience in banking.
Not the least curious feature to be
discovered in the history of this insti-
tuition is it's latter day relations to
the First National bank, with which
it is closely associated, for when the
Chase National bank was organized, it
represented a difference between those
who, at that time, controlled the First
National bank and the man who organ
lied it. Furthermore, the First Ma
tional bank was the first of Ameri-
can banks, at least in New York, to
organize under the new national bank
ing act, which was adopted in war
days. There has always been some
difference of opinion respecting the in
dividual to whom the first conception
of the national banking system came
and who brought his views to the at
tention of the secretary of the treas
ury, Salmon P. Chase. But there is
no doubt that John Thompson work ed
out plan, the fundamental princi-
pie of which is embodied in the ma
tional banking law. e. G. Spaulding, a
of Congress from Buffalo, ad-
vocated the plan, as did the Secretary
of the Treasury, Governor Chase. Or
lando B. Potter, afterwards member
of Congress from New York, seems
also to have carefully considered a
plan which resembled Mr.. Thompsons
he had no knowledge that
the latter was advocating a national
banking law of this kind.
FIRST BANK UNDER SYSTEM
Congress authorized the establish
ment of a national banking system,
but there was grave doubt whether
any of the state banks would accept
the opportunity or whether a consider
able number of new organizations
would be perfected in order to take
advantage of 1t. Mr.. Thompson went
about among his friends and secured
capital enough for the organization
Of the first of the national banks
New York. He was the dominant
figure in it. In time, 1T gained
the favor of the government
and became it's fiscal agent at New
ork.
Members of Mr. Thompson's family
succeeded him in the active manage
nent. There came an emergency at
the time of the panic of 1873, due to
to the fact the bank bought foreign
exchange of Jay Cooke & Co. of ap
proxima tely 100000 for the account of
the government. Two or three days
later the Cooke failure took place. and
of course, the bank had to make the
amount good.
There arose some differences on this
account which resulted in the purchase
oy George F. Baker, then cashier, of
the stock of the president of the bank.
bn IF Tnh n ThoDnncnp
Mr.. Thompson was annoyed at this loss
Of representation in the bank, for he
had a strong personal pride in the fact
hat to him was due the organization of
t. He, therefore in association with
Jew friends, organized a new national
oank and, in honor of his friend, Gov
ernor Chase, named it the Chase National
bank.
John Thompson was a unique and &C.
centric character. He was known all
over the country before the war by his
weekly publication which was called
rhompsons Bank Note Reporter. This
reported all counterfeit state bank bills
and also gave the prevailing rate of ex-
change at New York upon state bank
bills. After he organized the Chase bank,
he was accustomed to sit by the front
window, a hearty and somewhat loquaci-
ous man of venerable years, his feet
encased in home-knit wooden stockings
and his waistcoat pocket bullying with
tobacco leaves, which was his favorite
method of using tobacco. for he occasion
ally stripped a leaf and put it in his
mouth. He was as strong an advocate
of silver as were any of the silver miners
of the west.
After Mr.. Thompsons death and with
the advent of Calvin S. Brice of Ohio
and General Samuel Thomas to financial
and political power, they took over the
bank and were presumably not very sue.
cessful in its management. Some loans
were made that were not very promising
They called to the presidency Henry W.
Cannon, who had been comptroller of
the currency at Washington.
Not until the advent of A. Barton Hep
burn, first as vice president and than as
president, did the institution begin great
ly to prosper. Mr.. Hepburn was banker
of both theoretical and practical expert
ence. He had been bank superintendent
of New York state, afterward bank ex-
aminer of New York city and in the clos
ing years of Harrison's administration
was comptroller of the currency. He
found time to write two works upon
American banking which have become
standard authorities. Partly or chiefly
his influence the Chase Ma
tional and the First National established
a community of interest which was ad-
to both. Deposits increased and
resources enlarged until at last the in
stitution was numbered among the great
est of American banks.
Mr.. Hepburn cultivated successfully a
large line of out-of-town correspondence.
He showed great skill in handling some
Of the unpromising investments which