Bank of Michigan - Detroit, MI

Bank Information

Episode Type: Suspension → Reopening
Bank Type: state
Start Date: March 7, 1840
Location: Detroit, Michigan (42.331, -83.046)

Metadata

Model: gpt-5-mini
Short Digest: 80ed41e6b3a5cf97

Response Measures

None

Description

Article (Morning Herald, 1840-04-07) discusses the Bank of Michigan (Detroit) and its 'late suspension' (notice dated March 7, 1840). The suspension is attributed to increased demand for exchange to pay Eastern creditors (i.e., inability to meet eastern remittances), not to a depositor run or fraud. The article does not describe a receivership or permanent closure; it discusses legislative measures and the bank taking actions to obtain exchange, suggesting a suspension with intent to resume. OCR errors in the excerpt were corrected (e.g., dates and fragmented sentences).

Events (1)

1. March 7, 1840 Suspension

Cause: Correspondent
Cause Details: Inability to meet eastern remittances / increased demand for exchange to pay Eastern creditors; position of western banks and difficulty furnishing Eastern exchange led to suspension.
Newspaper Excerpt: The late suspension was caused by the increased demand for exchange to pay Eastern creditors ...
Source: newspapers

Newspaper Articles (1)

1. April 7, 1840 Morning Herald New York, NY

Article from Morning Herald, April 7, 1840

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Article Text

£493.000 This return shows an increase of currency to the amount of 307,000 And an increase of bullion, And also evinces in the increase of securities a greater confidence on the part of the bank than she has shown for many months. She has, no doubt, taken the earliest opportunity to expand, in order relieve the manufacturing districts, and allay that popular feeling which is now running strongly against the bank, and in favor of joint stock banks. In spite of thisapparently increased confidence on the part of the money power trade yet remains dormant in the manufacturing districts. The news carried out by the British Queen is calculated to give ton start; and f nothing serious grows out of the controversy. business with the continent may so far revive as to give prices an upwardtendency. This view has led many to imagine that prices have seen their lowest points. An individual, calling himself S. F.. Watkins, from New York'has been arrested in New Orleans, and $43,000 of bills of exchange and post notes of the Farmers' Bank of Seneca county found upon him. The post notes of this concern have been many weeks under protest. In pursuance of the report of the committee on the Michian $5,000.00 loan, an abstract of which we gave a few day since, law has been passed, and received the signature of the Governor, entitled an act to autherise the antieipation of certain instalments of the five million loan. By this law the auditor is authorised to make arrangements with the Bank of Michigan and the Farmers' and Mechanics Bank of Michigam, or either of them, or any specie pay ing Bank, to advance from time to time such sum or sums of momey as the State may need, to meet outstanding claims upon the internal improvement funds. by selling to said bank or banks the drafts for the instalments here become due on account of the five million loan, and as often as it shall become neces. sary to raise money to meet the liabilities of the State, under appropriations made or to be made until the next annual meeting of the Legislature, or until provision shall be made by law for placing the funds of the State in a State Bank, if one be hereafter incorporated: Provided, that the interest to be paid in anticipation of said instalments shall notexceed six percent per annum. This to apply to not more than five instalments. The following are the 3d and atthections of the same Sec. 3 That the money. when raised by authority of this act,shall be place.1 in such bank or banks as have advanced the the same to the credit of the internal improvement fund of this State, and shall be applied in payment of claims against State for labor done, and materials furnished the works of internal improvement directed by law. and See. 4. That every provision of law in force requiring or authorising any proceeding against the Bank of Michigan Farmers and Mechanics Bank of Michigan, and the branches of the said banks, respectively, with view to forfeit their charters wind up concerns, or which requires them suspend their operations and proceedings in consequence of to a refusal to pay their debt in specie, is hereby suspended until the first Monday of February next. Here is another specimen of Pennsylvania legislation. The Banks are exempted from all penalties for their fraudulent suspension. provided they will lend money to the State. In every State the same feature predominates. The governments are. through their necessities, entirely in the power of the banks, and all legislation against the institutions ends in the triumph of the latter. The Michigan law is preferable to the Pennsylvania law inasmuch as it compels the banks to pay specie hereafter, and provides that every bank which shall become the purchaser of the whole or any part of the instalments of the five million loan by this act authorised to be sold, shall be compelled to redeem its notes, the notes of its branches, and its post notes. and other evidences of debt, either by specie by drafts on New York at sight. or to be drawn from time or against the several instalments of the five million loan, and payable on the days when the several instalments shall respectively fall due, beginning with the April instalment, or against such bills of exchange as shall be taken in the lar business of said bank Provided that HO bank availing regu- it. self of the provisions of this act, shall be permitted to charge more than two percent. for drafts payable at sight, one and half per cent for drafts payable thirty days after sight, one per a cent for drafts payable sixty days after sight, one half of one per cent for drafts payable ninety days after sight, and that drafts payable four months after sight, shall be given without premium. This law was accepted by the two banks mentioned. which immediately commenced drawing against the instalment due the 1st April,b the U. S. Bank, and turing the three days sub- on sequent to the passage of the act, the Bank of Michigan, New-York, to the amount of $130,000 at per cent. The drew following notice has been issued by this Bank BANK OF MICHIGAN Detroit, March 7,1840. Ata the meeting of the Directors the Bank of Michigan, 1840. banking house in the house in the Detroit, March held which Ordered That hereafter no notes be received for able one of the banks in this collection on all collections to be made (except for resident city, and that H.K SANGER. customers) per cent. the bank shall charge for its services half of The report of the Joint Committee. appointed the Cashier. ture examine into the causes of the suspension, Legislanied by a minority report of that Committee, in is accompacharged that the Bank of Miehigan has violated its chartered which it is issuing their own notes, made payable at the branches, by 59.859 tion their OWN counter. On the 1st January, 1840, the circulaof the Bank of Michigan was, 3.783 The Deposites, $63,659 Total immediate liabilities. All immediate means. was, Specie, about to 12. Since that time it has issued $30,000 5,571 of stamped payable the branch of Kulamaseo." The bills of the the committee state that the late suspension was majority increased demand for exchange to pay Eastern caused by by the utter inability of the btors of the Bank creditors. engagements. and by the peculiar position of to meet their makes her the point to which tends all the circulation Detroit, which Western Banks specie exchange. The bills of the troit Banks and their branches. form the of the De medium of the country, and its value entire circulating to the East has much depreciated. in consequence means of of remittance the Banks state against lity view of that the the Bauks drafts to furnish the Eastern exchange. It the in inabi- this mentioned,are support raise the value of the loan. as above very uncertain. whether the instalments currency. It is by the United States Bank in an acceptable will be paid institution. taking advantage of the late law authorizing currency That pension, have become has refused pay specie on its marked sug. due, and will probably pay nothing notes, which bills o the state loan. These being at a small but their Michigan, as compared with her own currency. premium in par, the manner that the law of Florida may be called bonds soldat should Col. Gamble. That law required that the Territorial was evaded said that par: them at loss of 15 United in the per cent. and or Tenth Ward may be par in Michigan currency manne the late legislature The Louisiana report made Mississippi ated by currency. the tains the same argument such that is that the reports have presented: neighboring States. suspension owing to the suspension in If the reports the subject we find that made on the has where seem necessity to for suspension ened by the failure of the and cannot have been fright. satisfactory reason for their suspension now giveany commitiee ance to refuse to redeem their specie. or The their coulinu. as follows: Louisiana agree there is there That redundancy The admitted. banking capital this aggregate $41,737,691 time, 6,908,784 The circulation the capital banks large stock amount holders will that the illustration As a for allowing the on ending year $3,724,584 31st No. 700,000