Missouri Banks and the Civil War the End

MISSOURI BANKS AND THE CIVIL WAR:
THE END OF A PROSOUTHERN ENTREPRENEURIAL ELITE
A thesis
presented to
the Faculty of the Graduate School
University of Missouri-Columbia
________________________________________
In partial fulfillment
of the Requirements for the Degree
Master of Arts
________________________________________
by
MARK W. GEIGER
Dr. LeeAnn Whites, Supervisor
2000
ACKNOWLEDGEMENTS
I wish to acknowledge the help and advice of various persons in the
preparation this study. First, my thesis advisor, Professor Leeann Whites of the
History Department at the University of Missouri at Columbia, was of invaluable
assistance throughout, from the planning and execution of the research, to the
writing, editing, and packaging of the final result. Professors Susan Flader and
Theodore Koditschek of the University of Missouri History Department also
provided many useful criticisms which helped to guide my efforts. Professor
Ronald Ratti of the Economics Department provided valuable insight regarding
Missouri’s transition to the national banking system. I was also greatly assisted
by financial support provided by the Brownlee Fund of the State Historical
Society of Missouri, and a Faculty Development Grant from William Woods
University.
ii
LIST OF ILLUSTRATIONS
Page
Sylvan Villa, near Glasgow, Missouri, 1940 1 Frontpiece
Missouri banks of issue and their branches, June 1861 2 18
Missouri slavery in 1860 3 22
Farmers Bank of Missouri Ten Dollar Bill 24
Mechanics Bank of St. Louis Twenty Dollar Bill 24
Composition of Money (M1) in 1860 4 25
Bank of St. Louis parent branch, St. Louis, 1860 5 28
Cooper County – Mean Household Property by Decile, 1860 6 33
Cooper County–Share of Aggregate Property/Income

by Quintile, 1860 to 1997 7 35
Cooper County–Heads of Households by Regional Origin, 1860 8 37
Cooper County–Household Property by Regional Origin, 1860 9 37
Cooper County–Household Property by Length of Residence, 1860 10 38
David Waldo 11 54
Reverend Thomas Johnson 12 55
Captain William David Swinney 13 55
Colonel Edward Cresap McCarty 14 58
Robert Barnes 15 60
John J. Anderson 16 61
John A. Brownlee 17 62
Governor Claiborne Fox Jackson 18 87
iii
LIST OF ILLUSTRATIONS (CONT.)
Page
Former Governor Stirling Price 19 91
Frequency Distribution of Bank Cases 20 122
Promissory Note 21 123
Cooper County, Missouri–Defaulted Promissory Notes, 1861 22 125
Cooper County Sheriffs’ Sales – Number of Judgments per

Year 1858 – 1865 23 134
Cooper County Sheriffs’ Sales – Bank Judgments–

Total Acreage Sold, 1858 – 1865 24 135
Cooper County Sheriffs’ Sales – Number of Bank-Judgments –

Sales per Year, 1858 – 1865 25
136
Goodbye to All That: Residence of William B. Sappington,

near Arrow Rock, Missouri 26 157
Account Gains and Losses Summary27 192
Loan Portfolio Overview, 1858 – 1865 28 195
Loan Portfolio Detail, 1860 – 2 29 197
Suspended Debt Overview, 1858 – 1865 30 198
Suspended Debt to Total Portfolio Overview, 1858 – 1865 31 199
Suspended Debt Detail, 1860 – 1862 32 200
Extended Loan Portfolio Overview, 1858 – 1865 33 201
Government Debt to Total Assets Overview, 1858 – 1865 34 202
Real Estate and Furniture Overview, 1858 – 1865 35 202
Real Estate and Furniture Detail, 1860 – 1862 36 203
iv
Page
Total Cash Overview, 1858 – 1865 37 204
Total Cash Detail, 1860 – 1862 38 206
Circulation Outstanding Overview, 1858 – 1865 39 209
Circulation Outstanding Detail, 1860 – 1862 40 210
Due Depositors Overview, 1858 – 1865 41 210
Due Depositors Detail, 1860 – 1862 42 211
Clearinghouse Accounts Overview, 1858 – 1865 43 213
Clearinghouse Accounts Detail, 1860 – 1862 44 214
Current and Noncurrent Assets Overview, 1858 – 1865 45 220
Suspended Debt to Total Assets Overview, 1858 – 1865 46 221
Net Working Capital Overview, 1858 – 1865 47 222
Net Working Capital to Current Assets Overview, 1858 – 1865 48 222
Cash Ratio Overview, 1858 – 1865 49 223
Debt to Equity Ratio Overview, 1858 – 1865 50 225
Total Equity to Total Liabilities Overview, 1858 – 1865 51 227
Net Income Overview, 1858 – 1865 52 229
Return on Assets Ratio, 1858 – 1865 53 230
Return on Equity Ratio, 1858 – 1865 54 230
Inflation-Adjusted Return on Assets Ratio, 1858 – 1865 55 231
Inflation-Adjusted Return on Equity Ratio, 1858 – 1865 56 231
v
Page
Total Assets and Total Equity Overview, 1858 – 1865 57 233
vi
TABLE OF CONTENTS
ACKNOWLEDGEMENTS iv
LIST OF ILLUSTRATIONS v
Chapter
INTRODUCTION: THE PIVOTAL IMPORTANCE OF THE BANKS 1
1. MISSOURI BANKS IN SOCIAL AND ECONOMIC CONTEXT 15
2. MISSOURI BANKERS – DEMOGRAPHICS AND PSYCHOGRAPHICS 49
3. THE BANKS DURING THE WAR 84
4. PROMISSORY NOTES AS ALTERNATIVE FINANCING 120
5. THE NEW REGIME 143
APPENDICES
I. METHODOLOGY AND SOURCES 163
II. SOURCES AND USES OF FUNDS 185
III. LIQUIDITY, LEVERAGE, AND PROFITABILITY:

THE BANKS’ OPERATIONS IN RETROSPECT 218
BIBLIOGRAPHY 240
vii
Sylvan Villa, near Glasgow, Howard County, Missouri in 1940
My grandparents lived on an estate of several thousand acres, three miles from

Glasgow, in Howard County, Missouri. Here, my mother was born and here she
and Uncle Oswald grew up. The simple, commodious two-story brick house, four
rooms across the front, was painted a soft yellow; the front porch was painted
white and was supported by fluted columns. Sylvan Villa was appropriately
named, for it stood in a wide, spacious yard, surrounded by beautiful trees and
flowering, old fashioned shrubs: lilac, mockorange, bridal wreath snowball, and
there were two mounds of gorgeous peonies, one on either side of the herring-
bone brick walk that led from the front porch to the driveway, circling the lawn
which stretched away down to the big gate. Never can I forget those beautiful
trees on the lawn: oak, locust, thorn trees with delicate leaves and long pods, a
kind of acacia. . . . It is said that one could locate a Virginian in Missouri by the
groves of locust trees.
Berenice Morrison-Fuller, Plantation Life in Missouri, recalling her

grandparents Captain and Mrs. William David Swinney. 1
1
Berenice Morrison-Fuller, “Plantation Life in Missouri,” Glasgow Missourian,
6/2, 6/9, 6/23, 6/30, 7/7/1938.
viii
CREDITS
1
Missouri State Historical Society Photo Collection, Columbia, Missouri.
2
Map prepared by the author. Source: “Semiannual Statement of the Condition of
the Banks of the State of Missouri,” St. Louis Missouri Republican (weekly), 2/1/1861.
3
1860 United States Census for Missouri.
4
Richard H. Timberlake, Monetary Policy in the United States. Quoted in Roger
LeRoy Miller and David D. Van Hoose, Essentials of Money, Banking and Financial
Markets, p. 301.
5
Edwards, Great West, p. 283.
6
Original calculations by the author. Source: 1860 United States Census for
Cooper County, Missouri.
7
8
9
10
11
Missouri State Historical Society, Columbia, Missouri.
12
Johnson family vertical file, Missouri State Historical Society, Columbia,
Missouri.
13
E. Maurice Bloch, The Paintings of George Caleb Bingham: A Catalog
Raissonne’, p. 52.
14
Davis and Durrie, p. 372.
15
ix
CREDITS
16
17
18
19
20
Circuit Court Minute Books by county, 1860 – 5.
21
William H. Trigg vs. Nathaniel Sutherlin, Walker H. Finley, William E. Jamison;
Cooper County Circuit Court Case # 69, March, 1863 Session. [CO633069].
22
Circuit Court Minute Books, 1860 – 5, Cooper County, Missouri.
23
24
25
26
Illustrated Atlas Map of Saline County, Missouri (St. Louis: Missouri Publishing
Company, 1876), p. 60.
27
Op. Cit., ref. footnote 28.
28
All banks: “Banking Statistics – Missouri,” Bankers Magazine, Boston, May,
1859, p. 886 –7; Jackson, Claiborne Fox, “Bank Commissioner’s Report,” dated February
1, 1860, Journal of the Missouri Legislature, 20th General Assembly Extended Session,
House Business, Appendix, Jefferson City, 1860, pp. 3 – 21; “Semi-Annual Statement of
the Condition of the Banks of the State of Missouri on the First Day of January, 1861,”
St. Louis Missouri Republican, 2/1/1861, 1-3; “Semi-Annual Statement of the Condition
of the Banks of the State of Missouri on the First Day of July, 1861, St. Louis Triweekly
Missouri Republican, 8/1/1861, 2-9, 10; “Semi-Annual Statement of the Condition of the
Banks of the State of Missouri on the First Day of January, 1862,” St. Louis Triweekly
Missouri Republican, 4/16/1862, 2-6, 7.
Bank of St. Louis: St. Louis Triweekly Missouri Republican, 1/8/1863, 2-9; St.
Louis Triweekly Missouri Republican, 1/13/1864, 2-6; St. Louis Daily Missouri
Democrat, 2/1/1865, 1-7 (table); St. Louis Triweekly Missouri Republican, 1/6/1865, 2-7;
St. Louis Daily Missouri Republican, 1/4/1866, 2-8.
x
CREDITS
Bank of the State of Missouri: St. Louis Daily Missouri Republican, 2/5/1862, 2-
8; St. Louis Triweekly Missouri Republican, 1/10/1863, 2-5; St. Louis Triweekly
Missouri Republican, 1/25/1864, 2-3; St. Louis Daily Missouri Democrat, 2/1/1865, 1-7;
St. Louis Triweekly Missouri Republican, 1/15/1865, 2-8; St. Louis Daily Missouri
Republican, 1/17/1866, 2-8.
Exchange Bank of St. Louis: St. Louis Triweekly Missouri Republican,
1/10/1863, 2-9; St. Louis Triweekly Missouri Republican, 1/11/1864, 2-5; St. Louis Daily
Missouri Democrat, 2/1/1865, 1-7; St. Louis Daily Missouri Republican, 1/4/1866, 1-6.
Farmers Bank of Missouri: Liberty Tribune, 2/13/1863, 2-7; Liberty Tribune,
1/29/1864, 2-4; Liberty Tribune, 4/7/1865, 2-4; Liberty Tribune, 1/19/1866, 2-6.
Mechanics Bank of St. Louis: St. Louis Daily Missouri Democrat, 1/12/1863, 1-
8; St. Louis Triweekly Missouri Republican, 1/10/1863, 2-7; St. Louis Daily Missouri
Democrat, 1/22/1864, 1-8; St. Louis Daily Missouri Democrat, 1/12/1865, 2-8; St. Louis
Daily Missouri Republican, 1/5/1866, 2-8.
Merchants Bank of St. Louis: St. Louis Triweekly Missouri Republican, 1/6/1863,
2-6; St. Louis Triweekly Missouri Republican, 1/25/1864, 2-5; St. Louis Daily Missouri
Democrat, 1/18/1865, 1-7; St. Louis Daily Missouri Republican, 1/7/1866, 1-7.
Union Bank of St. Louis: St. Louis Triweekly Missouri Republican, 1/17/1863, 2-
Democrat, 1/11/1865, 1-7; St. Louis Daily Missouri Republican, 1/7/1866, 1-7.
29
All banks: “Semi-Annual Statement of the Condition of the Banks of the State of
Missouri on the First Day of January, 1861,” St. Louis Missouri Republican, 2/1/1861, 1-
3; “Semi-Annual Statement of the Condition of the Banks of the State of Missouri on the
First Day of July, 1861, St. Louis Triweekly Missouri Republican, 8/1/1861, 2-9, 10;
“Semi-Annual Statement of the Condition of the Banks of the State of Missouri on the
First Day of January, 1862,” St. Louis Triweekly Missouri Republican, 4/16/1862, 2-6, 7.
Louis Triweekly Missouri Republican, 7/16/1861, 2-8; St. Louis Triweekly Missouri
Republican, 10/15/1861, 2-8; St. Louis Triweekly Missouri Republican, 4/7/1862, 2-5; St.
Republican, 10/14/1862, 2-8; St. Louis Triweekly Missouri Republican, 1/8/1863, 2-9.
Bank of the State of Missouri: St. Louis Daily Missouri Republican, 4/7/1861, 2-
Republican, 12/21/1861, 2-8; St. Louis Daily Missouri Democrat, 4/21/1862, 2-5; St.
Republican, 7/9/1862, 2-7; St. Louis Daily Missouri Republican, 10/11/1862, 2-6.
Exchange Bank of St. Louis: St. Louis Triweekly Missouri Republican, 4/4/1861,
2-8; St. Louis Triweekly Missouri Republican, 7/9/1861, 2-10; St. Louis Triweekly
Missouri Republican, 10/10/1861, 2-8; St. Louis Triweekly Missouri Republican,
4/7/1862, 2-7; St. Louis Daily Missouri Republican, 7/4/1862, 2-6; St. Louis Triweekly
xi
CREDITS
Missouri Republican, 10/11/1862, 2-8.

7/19/1861, 2-7; Liberty Tribune, 11/1/1861, 2-4; Liberty Tribune, 4/25/1862, 3-2; Liberty
Tribune, 7/25/1862, 3-2; Liberty Tribune, 10/24/1862, 3-1.
Mechanics Bank of St. Louis: St. Louis Triweekly Missouri Republican,
4/6/1861, 2-7; St. Louis Triweekly Missouri Republican, 7/16/1861, 2-8; St. Louis
Triweekly Missouri Republican, 10/8/1861, 2-9; St. Louis Triweekly Missouri
Republican, 4/21/1862, 2-6; St. Louis Daily Missouri Republican, 7/9/1862, 2-7; St. Louis
Merchants Bank of St. Louis: St. Louis Daily Missouri Republican, 4/7/1861, 1-
Republican, 7/17/1862, 2-7; St. Louis Daily Missouri Republican, 10/16/1862, 2-4.
Union Bank of St. Louis: St. Louis Daily Missouri Republican, 4/7/1861, 1-7; St.
Louis Triweekly Missouri Republican, 7/11/1861, 2-10; St. Louis Daily Missouri
Republican, 4/13/1862, 2-4; St. Louis Daily Missouri Republican, 7/7/1862, 2-9; St. Louis
30
31
32
33
34
35
36
37
38
39
40
41
xii
CREDITS
42
43
44
45
46
47
48
49
50
51
52
Louis Triweekly Missouri Republican, 7/1/1864, 2-5.
Bank of the State of Missouri: St. Louis Triweekly Missouri Republican,
Triweekly Missouri Republican, 7/7/1860, 2-7; St. Louis Triweekly Missouri Republican,
Triweekly Missouri Republican, 7/16/1865, 2-9.
Exchange Bank of St. Louis: St. Louis Triweekly Missouri Republican, 7/8/1859,
Missouri Republican, 7/9/1861, 2-8; St. Louis Triweekly Missouri Republican, 7/1/1862,
Missouri Republican, 1/4/1864, 2-6; St. Louis Triweekly Missouri Republican,7/1/1864,
2-5; St. Louis Triweekly Missouri Republican, 1/1/1865, 2-2.
1/20/1860, 2-5.
Mechanics Bank of St. Louis: St. Louis Triweekly Missouri Republican,
xiii
CREDITS
Triweekly Missouri Republican, 1/10/1863, 2-5; St. Louis Triweekly Missouri
Louis Triweekly Missouri Republican, 1/1/1865, 2-4.
Merchants Bank of St. Louis: St. Louis Triweekly Missouri Republican, 7/8/1859,
2-6; St. Louis Triweekly Missouri Republican, 1/1/1864, 2-5.
Union Bank of St. Louis: St. Louis Triweekly Missouri Republican, 1/4/1860, 2-
6; St. Louis Triweekly Missouri Republican, 7/7/1860, 2-7; St. Louis Triweekly Missouri
Republican, 1/1/1861, 2-9; St. Louis Triweekly Missouri Republican, 7/9/1861, 2-8;
1/1/1865, 2-4.
53
For income, Op. Cit., ref. footnote 52. For assets and equity, Op. Cit., ref.
footnote 28.
54
footnote 28.
55
footnote 28.
56
footnote 28.
57
footnote 28.
xiv
INTRODUCTION:
THE PIVOTAL IMPORTANCE OF THE BANKS
This study traces the fortunes of a pro-southern business elite, Missouri banking
officers, before, during, and after the Civil War. This was a small group, eighty-four men at
any given time, but their importance went well beyond their numbers. Elites by definition
are disproportionately powerful in their societies, and this group was no exception. These
men, the president and cashier of some forty-two banks, effectively controlled the state’s
money supply, with only minimal supervision by the state government and none at all by the
federal government. Moreover, they controlled almost all the commercial credit in the state.
The monetary economy in Missouri, indeed the money itself, depended on them.
In 1861 Missouri bankers strongly supported the Southern cause in the state. Besides
lending their personal support to the rebellion, the bankers employed their institutional power
for the Southern cause as well. This support was not negligible; Missouri banks were
conservative, well capitalized and well managed. When the war went against the South, the
bankers paid heavily for their politics. Because of the involvement of the banks, a much
broader group of persons was affected than just the bankers themselves. The banks lent
heavily to the rebels in 1861, paying out cash in return for promissory notes secured by the
signatories’ principal assets, their farms. When the war went against the South, the banks
wound up owning much of their erstwhile customers’ real property. The banks for their part
were turned inside out by the events of the war: The pro-southern bank officers were purged
and replaced by Union men, and a national currency and national banking system were
1
INTRODUCTION:
established. The new regime had no place for, and made no accommodation for, the
bankrupt and dispossessed pro-southern Missourians who had lost their land in the war.
Confederate debt relief did not rank high on the federal government’s priority list.
The war in Missouri destroyed the economy on which the pro-southern party had built
its power. Missouri’s slave-labor commercial-agriculture, moral considerations aside, had
been a going concern, profitable and viable. After the war this was all gone, but at least
Missouri was no more destroyed than other southern states. However, southern cultural
dominance in Missouri was breached to a greater extent than in the rest of the South. More
than any other southern state, postwar Missouri had an in-migration of northerners that
permanently altered the state’s population makeup and power structure. This displacement
of southerners by northerners was facilitated by the sheriffs’ auctions of many thousands of
acres of farmland between 1864 and 1866. These sales were a direct result of the banks’
activities in 1861 and 1862.
This study has two major themes: The first is a longitudinal examination of the
bankers themselves, a cohesive group of mid 19th century American entrepreneurs on the
western frontier: who they were, where they came from, and what happened to them. The
second theme is the bankers’ pro-southern politics, the nature of the support they tendered
the secessionist element during the war, and the unintended effects of that support. Besides
documenting the history of Missouri banks during the Civil War, this study charts the social
process that the banks set in motion and in which they participated. On one level this study
2
INTRODUCTION:
is the story of the uprooting of a southern elite through the destruction of their economic
power, and of a vanished way of life. Patterns of land ownership, the geographic origins of
the inhabitants of the state, voting and political control at the local level, still show the effects
of the financing of 1861.
I consider a belief in unitary causes to be simple-minded, and I certainly do not claim
that the later evolution of Missouri’s southern culture stem solely from the events traced in
the present study. The southern presence is palpable in Missouri still, in family memories of
incursions by bushwhackers and Union troops, horses stolen and young men murdered. But
missing from Missouri’s living southern heritage is an elite presence, so conspicuous in the
states of the former Confederacy. Southernism in Missouri is a minority, lower-class culture,
of accents, bumper stickers, and T-shirts, white-trash jokes and bad teeth. The visitor to the
state, seeing the Confederates’ present-day descendants can be excused for believing that
Southernism never rose above the Tobacco Road and coon-dog level. It is precisely
Missouri’s antebellum southern elite, rather than other sectors of the society, that was
primarily dislocated by the activities of the banks.
Even though Missouri’s slaveholders couldn’t compete with the Natchez nabobs for
grandeur, the Missourians had their own home-grown elite, as committed to the southern
cause as their counterparts farther south. But the wealthy families of the seceding south for
the most part regained their influence after the North lost the political will to further pursue
Reconstruction: From Virginia to Texas it is not difficult to find the descendants of the
3
INTRODUCTION:
planter aristocracy, wealthy families still. Whatever one thinks of these people, they are
much thinner on the ground in Missouri. The war was hotly contested in Missouri indeed; of
all the states Missouri ranked third in the number of military engagements fought on its soil
during the Civil War, after Virginia and Tennessee. However, on a per capita basis there are
ten times members of the United Daughters of the Confederacy in Virginia, and twice as
many in Tennessee, as there are in Missouri. 1
Loss of economic power does not always equal loss of cultural power. The cotton
aristocrats of the old Confederacy remained socially prominent, despite the economic disaster
the war visited upon them. But antebellum Missouri society was in a sense decapitated by
the war. Not only the bankers but their principal clients were displaced as well – the Little
Dixie squirearachy of slave-holding commercial farmers and planters. Extremes of wealth
and poverty were not as great as today, but property was extremely maldistributed: In
Cooper County, in the heart of Little Dixie, the wealthiest ten percent of households in 1860
owned 54% of total real and personal property; and the lowest thirty percent owned no
property at all. a In this little society the bankers were the wealthiest citizens, the oldest
settlers, owned the most slaves, had extensive familial and social ties to other men like
themselves. By war’s end, this upper tier was precisely what had been displaced.
Missouri bankers of this period were entrepreneurs as well as capitalists. Before
entering banking many of them had built large-scale mercantile businesses, which many of
4
INTRODUCTION:
them continued to operate. Many others were planters, sometimes on a substantial scale.
Also, in 1861, the banks’ presidents and cashiers had themselves founded the banks they
headed. 2 This gives an added dimension to the importance of the Missouri bankers of 1861.
In modern economic thought, lending and credit are essential to the structure of modern
industry. 3 Furthermore, since the work of Joseph Schumpeter in the first half of the
twentieth century, great importance has been assigned to the function of entrepreneurship of
modern industrial society. In Schumpeter’s view, such a society depends on the introduction
of entrepreneurial innovations, and in turn the capitalistic credit system grew out of and
thrived on the financing of these innovations.4 Therefore the relationship between the banker
and the entrepreneur is crucial. 5
Little has been written about Missouri bankers per se, but scholars have written that
the mercantile class as a whole in the Midwest and Border States was pro-Union. 6 Pro-
Union politics is easily equated to a progressive social orientation, and fits neatly with the
Marxian notion of the revolutionary and transformational role of the bourgeoisie, even
though Marx himself had almost nothing to say about entrepreneurship. Missouri bankers,
however, flatly contradict this: At the outset of the Civil War, where their politics could be
determined, over seventy-five percent of Missouri bankers were pro-Confederate. 7
Missourians were of divided sectional politics during the antebellum period, but in the
election of 1860 Missourians overwhelmingly voted for the centrist candidates Bell and
a
See Chapter 1.
5
INTRODUCTION:
Douglas. During the war over three times as many Missourians served in Union military
units as in Confederate. 8 Missouri bankers were of divided political loyalties as well, but
their sentiments were the other way around: Most Missourians opposed secession, but a
substantial minority – including some very influential groups–desired it. This included the
Governor and Lieutenant Governor-elect, the Speaker of the Missouri House of
Representatives, a majority of both houses of the 21st Missouri General Assembly convened
in Dec ember 1860, and many of the most substantial businessmen and farmers in the state,
including a majority of the bankers. Meanwhile, though most Missourians desired peace and
neutrality, the events at Camp Jackson in May 1861 and later actions by the Union military
authorities radicalized many. Missouri secession was not a lost cause from the start; history
is full of examples of determined minorities working their will on a mostly apathetic majority
including, it is argued, the American, French, Russian, and Nazi revolutions.
Many different histories can be told of any time and place, and historians tend to
concentrate more on some than others. History has become a broader topic than the
recounting of wars, court intrigue, and the doings of great men. Still, some topics, in
particular, money, banking, business and finance, receive short shrift. To take a recent
example, Christopher Phillips’ biography of Missouri’s deposed pro-Confederate governor,
Claiborne Fox Jackson, 9 contains not a single mention of Jackson’s two years as Missouri
Banking Commissioner immediately prior to his election as governor. The two principal
6
INTRODUCTION:
sources on Missouri banks are Timothy Hubbard’s and Lewis E. Davids’ Banking in Mid-
America: A History of Missouri’s Banks, and John Ray Cable’s The Bank of the State of
Missouri. Banking in Mid-America is the only book devoted solely to banking in Missouri,
from earliest origins in financing the fur trade up through the book’s publication in 1969.
The book is primarily an institutional history, tracing organizational developments in
Missouri, including the law of 1857, in the developing national legal and financial context,
rather than financial effects. Hubbard and Davids devote a chapter to the Civil War, but say
nothing regarding the bankers themselves, their lending patterns and clients, or the Missouri
economy in general. The book recounts several useful anecdotes of the war years and a
description of the banking system’s transition into a two-tier structure of state and national
banks, but does not consider the issue of the banking system as an agent of social change.
The authors omit entirely the critical events of 1861 and 1862, the kiting and defaulting of
massive numbers of promissory notes, the resulting financial panic, and the purge of the pro-
southern bankers.
John R. Cable’s The Bank of the State of Missouri, published in 1923, tells the story
of the State Bank, from its founding in 1837 until its closure forty years later. Cable’s book
is a mine of information regarding the history, organization, and practical workings of the
largest bank in the state in this period. Cable’s chapter on the Civil War provides the most
extensive coverage of the subject of Missouri banking anywhere. Cable, however, limits his
analysis to the State Bank, not the other eight banks chartered and doing business in the state
7
INTRODUCTION:
when the war broke out, and focuses chiefly on the Bank of Missouri’s headquarters branch
in St. Louis. The Bank of Missouri’s fortunes during the Civil War form only an episode in
Cable’s story, and Cable’s financial analysis treats mainly with actions of the legislature and
military government affecting the State Bank. Individual bankers are scarcely mentioned.
Regarding entrepreneurship, modern conceptualizations of entrepreneurs in Anglo-
American scholarship date from Joseph Schumpeter’s Theories of Economic Development,
first published in German in 1911 and translated into English in 1934. Thorstein Veblen’s
The Theory of Business Enterprise (1904) anticipated many of Schumpeter’s ideas, but
Veblen is viewed principally as a sociologist and his writings have been regarded mainly as a
footnote to mainstream economics. Schumpeter’s ideas with regard to the innovative
character of entrepreneurs and their destabilizing role in an equilibrium economy remain
current today and are highly relevant to the present study.
Chapter One, Missouri Banks in Social and Economic Context, describes the
structure of banking in Missouri as framed by the legislature, and the economic purposes
which it served. This chapter also describes the nature of money and lending in Missouri in
the late antebellum period, both of which were considerably different from today. A brief
discussion is included on the nature of 19th century accounting practice and its effect on
management decision-making. Chapter One concludes with a look at the demographic
makeup of a representative county, Cooper County and its largest town and county seat,
Boonville, to place the bankers in societal context.
8
INTRODUCTION:
Chapter Two, Missouri Bankers – Demographics and Psychographics covers the
demographics of Missouri bank officers, presidents and cashiers, both in headquarters offices
in St. Louis, Lexington, and St. Joseph, and in branch banks around the state. Standard
demographic measures are used, including state of origin, education, income, slavery and
politics. Illustrative biographical sketches of individual bankers are included. Research
findings on the psychographics of modern entrepreneurs, and what can be determined about
the personalities of such people, are briefly presented.
Chapter Three, The War in Missouri starts with the election of Abraham Lincoln,
through the maneuverings of pro-secessionist governor-elect Claiborne Fox Jackson, the
countercoup by Nathaniel Lyon, Frank P. Blair and others, and the gradual assertion of Union
military control throughout the state. This now-familiar story forms the background events
affecting banking, currency, and the economic situation in the state, which is the primary
focus of this chapter.
Chapter Four, The Promissory Notes, describes what measures the pro-southern
faction of Missouri took to appropriate the banks’ assets for war purposes. The notes’
signatories, the geographic extent of the promissory-note signing, and the later progress of
the defaulted notes through the courts are covered. The effects of the deaulted notes on land
ownership are traced in a one-county pilot study (Cooper County, again), but to extend this
further was beyond the scope of this book. The promissory notes are a very important
episode in the early history of the war in Missouri, and warrant further study.
9
INTRODUCTION:
Chapter Five, The New Regime, describes the end of the old banking system, and the
effect of the defaulted promissory notes on the planters and farmers of Little Dixie. This
chapter traces the later fortunes of the bankers of 1861, the Confederate majority and the
Union minority.
Appendix I, Methodology and Sources describes the four main primary sources that
form the foundation of this paper: biographical and demographic data on the individual
bankers and their clients, published statements of the banks’ financial condition, circuit court
records of the banks’ suits for defaulted promissory notes, and property-transfer records in
Cooper County. Difficulties in locating and obtaining the data, which no doubt account for
this subject having lain untouched for so long, are discussed. Problems of interpretation,
methodology, and analytical criteria are also covered.
Appendices II and III present a fundamental analysis of the banks’ financial condition
and performance starting from the last full year of peace, 1860, through the remainder of the
war. This is economic history of a fairly technical nature and may not be of interest to the
general reader, but was essential to the completion of this work. In the absence of
conventional sources – letters, diaries, eyewitness accounts and the like – financial-statement
analysis was the only way to determine what the banks – and the bankers – were doing in this
period. The source of this data was the banks’ published quarterly financial statements,
gleaned chiefly from St. Louis newspapers. Both appendices present an industry picture of
seven of the nine banks of issue in the state. The Union Bank of St. Louis and the Western
10
INTRODUCTION:
Bank of Missouri were excluded because complete sets of their financial statements could
not be recovered. The basic technique employed in both appendices is fundamental financial
analysis, including trends and ratios. Appendix I, Sources and Uses of Funds, examines the
banks’ loan portfolio, cash position, circulation, deposits, and clearinghouse accounts.
Appendix II, Liquidity Leverage and Profitability; the Banks’ Operations in Retrospect,
examines current and noncurrent assets, bad debt, net working capital, liquidity and cash,
debt to equity, and total assets to total liabilities. Appendix II analyses these topics using
modern diagnostic measures developed since the time of the events recorded in the banks’
financial statements. Hence, this appendix casts light on aspects of the banks’ operations,
which would not have been known to the bankers at the time.. Profitability measures had to
be calculated from scratch, as the use of income statements was not common in the Civil
War period and none have been discovered for the banks. Measures of profitability used
include net income, return on assets and return on equity, both nominal and inflation-
adjusted. This appendix concludes with a comparison of these measures with industry
averages for contemporary Missouri banks in the 1990 – 1998 period.
History, it has been said, is the graveyard of elites. The Missouri bankers and their
clients have been no exception. But besides its historical significance, this episode poses a
contemporary question, whether modern rebellions been financed this way. The check-kiting
scheme used by the bankers and the rebel party to get the money out of the banks before it
could be seized by the Union military would be just as possible today as it was in 1861. Nor
11
INTRODUCTION:
is it hard to find parallels to the social and political conditions prevailing Missouri:: A mixed
population profoundly divided in its politics; many bankers, judges, and major business
figures sympathetic to the rebel cause; and a breakdown in law and order. The same
conditions exist today in parts of Africa, the Middle East and South Asia, and the former
Soviet Union. The means described here of funding a rebellion would still be viable today,
as is the later story of a dispossessed people: The Palestinian example is a modern parallel,
showing what can happen to a people disfranchised and dispossessed in their own land, by a
government whose laws and legitimacy they do not recognize.
12
INTRODUCTION:
CHAPTER NOTES
1
As of the 1999 there were two hundred and fifty Missouri members of the United
Daughters of the Confederacy, of a total population of 5,380,500. Virginia had twenty-six
hundred members and a total population of 6,709,100. Tennessee had four hundred members
of a total population of 3,896,900. Sources: United Daughters of the Confederacy Minutes
Book, 1999 General Meeting, Richmond, United Daughters of the Confederacy, 1999.
Population statistics: Rand McNally Road Atlas, 1999, Skokie, Illinois, Rand McNally,
1999. Quoting from Market Statistics: S&MM Survey of Buying Power, 1999.
2
Schumpeter, p. 69.
3
Schumpeter, p. 70.
4
Schumpeter, p. 70.
5
Schumpeter, p. 195.
6
Atherton, for instance, writes that when the Civil War broke out “the mercantile class
constituted a strong link in Union sentiment, even in the border state of Missouri. . . . [T]hey
naturally sided with the nation against the states when the test came.” (Atherton, p. 26). It is
worth pointing out that to arrive at his conclusions Atherton studied one hundred and forty
merchants in the pioneer period, and then projected his findings onto the entire merchant
class from Ohio to Arkansas.
7
The sectional politics of the 125 bank officers was as follows:
Total number Southern sympathizers identified: 66
Total number Union sympathizers identified: 21
Persons not found: 4
Political sympathies undetermined: 34
====
TOTAL 125
8
In the election of 1860, Unionist candidates out polled secessionists 110,000 to
30,000, or 73 percent to 23 percent. When war did come, Missouri contributed over 100,000
troops to the Union army, including 8,000 blacks, and nearly 80,000 more had participated
with varying degrees of enthusiasm in the loyal state militia. This compares with the
approximately 30,000 Missourians who had fought with the Confederate armies. Source:
13
INTRODUCTION:
CHAPTER NOTES
Primm, p. 274.
9
Christopher Phillips, Missouri’s Confederate: Claiborne Fox Jackson and the
Creation of Southern Identity in the Border West (Columbia: University of Missouri Press,
2000).
14
CHAPTER 1:
MISSOURI BANKS IN SOCIAL AND ECONOMIC CONTEXT
Owing to the activities of Missouri banks in 1861 and 1862, several thousand
well-off, pro-southern Missourians lost their property. To a lesser extent, the financial
interests of all the banks’ customers suffered as well. However, given the limited role
that banking played in the overall economy at this time, the interests of the larger society
were only indirectly affected.
In 1860 the federal government did not regulate banks or issue currency, and state
supervision of banks was minimal. Banks of the day performed many functions that
would now be reserved to the U. S. Treasury Department, and to the Federal Reserve
Banks. On the other hand, the banking sector was less important to the society as a
whole. The money economy extended into fewer parts of the society. Particularly in the
South and West, a large proportion of Americans lived by subsistence agriculture, and
many more were self-employed as craftsmen and small tradesmen. The circulating
medium itself was fragmented, with currency issued by different state banks dominating
their particular geographic regions. When the war came, Missouri bankers were strongly
pro-southern, and they backed their political convictions with the power of their
institutions. Because of the limited role played by banking in the economy of 1860, this
support carried less weight than would now be the case. The customers of the banks’
services, the business establishment in St. Louis and the wealthy commercial farmers in
Little Dixie, were primarily affected. When the war went against the South the bankers
paid the price for their politics, and these sectors of the society suffered along with them.
15
CHAPTER 1:
In 1860 Missouri’s banking system did not by any means extend throughout the
state. Partly this was because the banks themselves were new, having only been
established under the Missouri Banking Act of 1857. This act authorized the charter of
up to ten banks of issue, meaning banks chartered by the state to issue its own banknotes
as circulating currency. Characteristic of early corporations, they were conceived of as
agents of the government. 1 Eight new banking charters were actually issued, six to banks
headquartered in St. Louis and one each in Lexington and St. Joseph. a The ninth bank of
issue in the state, the Bank of the State of Missouri, was rechartered under the act. It had
originally been chartered in 1837, for twenty years. Previous to the 1857 law the State
Bank of Missouri was the only bank legally chartered to issue currency. While this bank
was prudently and conservatively managed, by the late 1850s it was too small for all the
banking needs of the state, including its outstanding circulation of banknotes. Until the
new banks were chartered under the Act of 1857, Missouri had by far the lowest ratio of
banking capital per capita of any state its size. 2 For the average Missourian this meant a
dearth of available credit resources, and also of circulating money. The 1857 law was
chiefly the work of Representative Claiborne Fox Jackson of Fayette, himself a former
banker of that city. 3 At the time the law was considered a strong, well-crafted, and
thoughtful piece of legislation, modeled on the best and most up to date practice of the
a
In St. Louis, The Bank of St. Louis, the Exchange Bank of St. Louis, the
Mechanics Bank of St. Louis, the Merchants Bank of St. Louis, the Southern Bank of St.
Louis, and the Union Bank of St. Louis. In Lexington, the Farmers Bank of Missouri,
and in St. Joseph the Western Bank of Missouri.
16
CHAPTER 1:
day. 4 Upon passage of the Act Jackson was appointed the first Missouri Bank
Commissioner by then-Governor Sterling Price. 5 In 1860 when Jackson himself was
elected governor, he resigned his position as Bank Commissioner and appointed Ex-
Governor Price as his replacement 6. On the eve of the Civil War both men, therefore,
were very knowledgeable about the banking business, the state government and
economy, and were personally acquainted with all the bankers and legislators.
When the Civil War broke out, there were nine separate chartered banking
corporations in Missouri. Counting parent banks and branches, these banks operated in
forty-two locations around the state. These were banks empowered by the Missouri State
Legislature to legally issue their own banknotes as currency. Such banknotes represented
virtually the entire supply of circulating money in the state, absent any meaningful
quantity of money issued by the federal government. Furthermore many states, Missouri
included, had laws against accepting out-of-state banknotes in settlement of debts. 7
These banks were not the only banks in Missouri, nor were they the only depository
institutions. There were numerous private bankers, William H. Trigg in Boonville,
Robert Aull in Lexington, Page & Bacon in St. Louis, and many others. There were also
the savings institutions, chiefly located in St. Louis, originally founded as workingmen’s’
associations to make loans for home purchase and construction, analogous to savings and
loans today. Boatmen’s Bank of St. Louis, which is still in operation, began as a savings
institution. Neither the private bankers nor the savings institutions were authorized to
17
CHAPTER 1:
circulate banknotes, as the banks chartered in 1857 had been. These latter banks were by
far the most important sector of the banking industry in Missouri. These banks were the
were the best capitalized, operated the only branch networks apart from their home
offices, and had connections with corresponding banks in major U. S. cities and abroad.
Most importantly of all, they controlled the money supply in the state.
In 1861 Missouri’s nine banks of issue each had at least two branches, the Bank
of the State of Missouri having the most with ten. Counting parent banks and branches,
18
CHAPTER 1:
Missouri was served by forty-two banks in all, located along the riverine transportation
system that served the state prior to the railroads. 8 Apparent anomalies, like the Warsaw
branch of the Mechanics Bank of St. Louis in Benton County, reflect Warsaw’s location
at the upper limit of steamboat navigation on the Osage River. The geographical
distribution of the banks, therefore, is a good indicator of the extent of the money
economy in Missouri, and mark those parts of Missouri connected to the national market.
Banking has always been a local business, with long-term personal relationships of
paramount importance.
The main function of money, purchasing power, is not only represented by notes
and coin in circulation. An even larger component of total purchasing power in dollar
terms is loan commitments, or credit. By issuing loan commitments in excess of their
deposits, banks can create credit, i.e. purchasing power, ex nihilo. 9 This process, which
has been understood and described by economists since Adam Smith, does not increase
capital but mobilizes it and makes it more efficient. 10 Except for private bankers with
their much smaller resources, the same eighty-four banking officers controlled almost all
the commercial credit in the state. Bankers, in their capacity as allocators of scarce
resources – money and credit for investment and business formation, are pivotal to both
the economy and the hierarchy of social relations that economy supports. The money and
credit market, into which all kinds of credit requirements go and which is the
headquarters of the capitalist system, was effectively controlled by these men. 11 Nor was
19
CHAPTER 1:
there any alternative source; Missouri, a western state, was at this time was only
tenuously connected to distant financial centers.
Missouri in this period divided roughly into four separate regions, economically,
socially, and culturally: The north central and southern parts of the state were largely
terra incognita, unconnected with other parts of the state, and, it seems, much else. Here
the land was poor and distant from the river transportation network. Subsistence
agriculture and a poor-white pioneer lifestyle dominated in these regions long after the
frontier and the tide of settlement had moved farther west. The other two regions were
St. Louis and its immediate neighborhood, including St. Charles County, and Little Dixie,
composed of the counties bordering the Missouri River and a hinterland on either side
about two counties deep. The counties up and down the Mississippi River were satellites
of either St. Louis or Little Dixie, depending on one’s viewpoint. St. Louis and Little
Dixie had the greatest degree of communication with each other, through the antebellum
period as now. Little Dixie was the most economically vibrant region of the state, the
main source of Missouri’s agricultural exports, the dominant political power in the
antebellum period, and the heartland of Missouri culture. 12 Outside of St. Louis, the
majority of the banks were in Little Dixie.
By 1861 Missouri had been a state for forty years. Distant as it was from the
centers of power, Missouri was a part of the evolving national economy. In Little Dixie
commercial agriculture predominated, especially corn, hogs, hemp, tobacco, and
livestock. Little Dixie’s corn and hogs were traded up the Missouri River to feed the
20
CHAPTER 1:
settlers heading for points west, and down the Mississippi River to feed the plantation
slaves of the Lower South. Missouri hemp was used for the binding of cotton bales.
Missouri tobacco, though not generally of as fine a grade as Virginia or Kentucky, was
used for lower-quality tobacco products and for wrappers. The South’s sale of cotton to
the mills of Old and New England earned the hard currency that was remitted to Missouri
to pay for its products; this money was in turn sent east to pay for manufactured goods.
St. Louis was the great collection point for all this commerce, physical distribution,
warehousing, transportation, wholesaling and retailing, and banking, dominating the
entire Missouri and Upper Mississippi valley above New Orleans. 13 Missouri’s balance
of trade was generally favorable with the south and west, and unfavorable with the east. 14
The major function of banking in Missouri in the late antebellum period was to support
this triangular east-west, north-south trade.
The mechanization of agriculture was in its infancy, and large-scale farming,
particularly tobacco and hemp, meant slavery. Little Dixie therefore had the largest
concentration of slaves in the state, and the highest proportion of slave ownership. As
financial intermediaries for the sale of these products, banking in this period was
intimately connected with slavery, and the distribution of banks paralleled that of slaves.
Where they can be identified, banking clients were heads of households in the upper two
deciles of property ownership, engaged in agriculture. Less well-off farmers either
operated on a subsistence basis, or else marketed their surplus produce locally. Germans,
whatever their occupation or value of their property, almost never did business with the
21
CHAPTER 1:
banks. 15 Merchants used banking facilities, especially for transferring payments, but
were more likely to obtain commercial credit from their suppliers and merchant
wholesalers in St. Louis and other eastern cities. Banking, then, as it existed in Little
Dixie in 1860, was a service extension to slave-based commercial agriculture,
particularly the raising of tobacco and hemp for market. 16
22
CHAPTER 1:
In this period collateralized business loans to customers were chiefly of two sorts:
mercantile and agricultural. Mercantile loans consisted of financing a merchant’s
purchase of inventory until this could be sold and converted into cash. More importantly
in Missouri, agricultural loans covered a farmer’s expenses through the harvest season
until the crops could be processed, shipped, sold and cash received. In addition, as a
public service, banks were expected to make ‘accommodation loans’, to deserving
persons of good standing in the community on the strength of their signature alone,
without any collateral whatsoever. 17 Real interest rates on loans, though these varied by
time and place and state of the business cycle, were higher than they are today. 18 Loan
periods by today’s standards were quite short, often limited to less than a year by the
bank’s charter. 19 This was sufficient to cover an agricultural cycle or a trip east to
purchase manufactured goods, until payment was received from the final customers. 20
Prior to the Civil War banks did not engage in longer-term debt financing characteristic
of industrial capitalism. There was little demand as yet for such lending, and short-term
loans were considered safer. 21 Some banks in other states did engage in mortgage
finance, though Missouri banks did not. Indeed, they were prohibited from holding real
estate by the Act of 1857. 22 Banks in southern and western states had been burned so
often and so badly by real-estate speculation, that the legislature had barred this form of
investment entirely.
In the early nineteenth century in Missouri and other states on the southern and
western frontiers, merchants were forced to themselves carry money to and from distant
23
CHAPTER 1:
commercial centers to buy their stock, at the risk of being robbed or murdered. 23 In the
later decades before the Civil War a major function performed by banks in western states
was effecting the long-distance transfer
of funds to facilitate commercial
transactions. 24 Bank money transfer
was usually accomplished by
purchasing a draft on a bank in the city

Farmers Bank of Missouri ten-dollar bill.
Portrait is of Robert Aull, founder of the bank
and president of its parent branch in Lexington where the transaction would take place.
from 1857 to 1860.
If a merchant in Lexington, Missouri
wished to purchase a stock of goods in New York, he would first determine by letter or
telegraph the price to be paid in New York. The merchant would then go to a Lexington
bank that had a correspondent or parent bank in St. Louis, which in turn had a
correspondent bank in New York. Using local money, either banknotes issued by the
Lexington bank or another nearby
bank, the Lexington merchant would
purchase either a certified check drawn
on the New York bank, or banknotes

Mechanics Bank of St. Louis twenty dollar bill.
Portrait is of J. W. Wills, president of the St. issued by the New York bank. This was
Louis parent branch from 1860 to 1864.
clearly better than personally carrying
24
CHAPTER 1:
gold upwards of fifteen hundred miles, and banknote issue was an important source of
revenue to banks.
From the point of view of the bankers – in Lexington, St. Louis, and New York–
the smooth working of such a system depended principally on two things: trust in each
others’ word, and a fine appreciation of the relative values of the New York and Missouri
currency, which could, and did, fluctuate on a daily basis. 25 Still, the local currency and
bank-transfer system made for a non-transparent marketplace with considerable room for
distortion and non-competitive pricing. In the late 1850s ‘Eastern exchange’, or ‘Eastern
sight’ – meaning payable on demand – prices were quoted in the St. Louis newspapers,
along with exchange rates for notes of out-of-state banks, gold, and silver. 26 With the
establishment of telegraphic contact with the east via Louisville in 1847, this traffic in
long-distance funds transfer became considerably easier. 27
Regarding the circulating medium itself, there were three kinds of money in
circulation in the United States on the eve of the Civil War: gold and silver coin, U. S.
COMPOSITION OF MONEY (M1), 1861 Treasury notes, and private

3%
banknotes. The Independent
38%
59% Treasury Act of 1846, the crowning
financial achievement of the hard-

PRIVAT E BANK NOT ES DEPOSIT S
GOVERNMENT CURRENCY money Jacksonians, barred the U.
S. government from receiving or paying out any monies except gold and silver coin. 28
Government finances could get no more hard-money than this. The value of specie – in
25
CHAPTER 1:
particular gold – coinage was the standard by which all other currency was judged, but
the supply of it was inadequate to the needs of commerce. U. S. Treasury notes were
interest-bearing securities akin to savings bonds. Treasury notes were not legal tender and
had only been issued in small quantities. They were generally held by banks as reserves
(where reserves were required), and could be used to pay obligations to the United States
government, such as excise taxes or tariffs. 29 Altogether gold and silver coinage and U.
S. Treasury notes made up only three percent of M1 in 1861 (see chart). 30 To make up
for the lack of an adequate circulation, foreign gold and silver coins circulated in the U.S.
until abolished as legal tender by act of Congress in 1857. 31 By that time gold production
in the California fields had increased the supply of precious metals in the country
sufficiently to render foreign coinage unnecessary. 32
On the eve of the Civil War, the money in actual use in the United States was a
confusing hodgepodge, in the absence of any circulating medium sponsored by the
central government. The largest quantity, in dollar terms, consisted of the note issues of
independent, private banks. 33 No banks, except for the more solvent of the state banks
and the most reputable money-center banks in New York, Philadelphia, and Baltimore,
had currency that served as a medium of circulation beyond even a few hundred miles of
their main offices. Given that the money changed with the locale, Americans of the
period in effect lived in a vast foreign exchange market. A Mr. Lowndes, writing to John
C. Calhoun, related the experiences of a traveler leaving Virginia for a three-state swing
through Kentucky, Tennessee, and Maryland in about 1840. To travel this far from home
26
CHAPTER 1:
he was obliged to change currency eight times, paying a broker’s fee for each
transaction. 34 Since there was such a multiplicity of different currencies in circulation,
counterfeiting was a real problem. An important part of a banker’s job was to stay
current on what was good money and bad. There were a number of publications – rather
price guides for baseball cards – that published monthly updates and warnings on the
latest currency issues, both real and bogus. 35
While there was a great variety of currency outstanding, there wasn’t very much
of it altogether. During the war this served to insulate from harm the majority of the
population that did without circulating currency, or used it only sparingly. On a per-
capita basis only about 5% as much money circulated in Missouri in 1860 as in 1999.36
Since money was in short supply, business often had to be transacted using other
expedients. Even in 1860 a greater dollar volume of payments were settled by check than
with cash. 37 Residents of outlying areas, such as Missouri, employed barter, scrip issued
by local merchants, and IOUs between parties known to each other. In ongoing
commercial relationships, such as between a storekeeper and a farmer, many sales would
be by book-entry only. That is, exchanges would be valued in currency, theoretically
gold, but no money would change hands. Instead the farmer would accumulate an
account receivable with the storekeeper and settle up once or twice a year, when the
farmer had cash money in hand. 38 In Missouri, as in most of the South, January 1 was
the customary day to settle accounts from the past year and to enter into new
arrangements. 39 Another frequent expedient, of considerable importance as the financing
27
CHAPTER 1:
vehicle used by the southern men in 1861, was the use of promissory notes. These were
essentially two-party checks, sometimes repeatedly endorsed to different assignees.
Among persons who knew and trusted each other, promissory notes were safe enough.
But the more times they changed hands and the farther they got from their original
signatories, the riskier such notes became. During the war promissory notes took on an
entirely different significance, which is discussed at length in Chapter Four.
Compared to today, banks in 1860 were small, personal businesses, run by their
owners largely as they saw fit. The St. Louis (parent) branch of the Bank of the State of
Missouri, the state’s largest, had only fourteen
employees in 1856, from the president down to
the watchman. 40 Organizational structures were
much thinner, and managers were almost always
investors and owners, rather than employees.
These were not small investments buried in a
professionally-managed mutual fund: The banks
were owned by small consortia of rich men who
had a very personal stake in what happened to it.
Bank of St. Louis parent branch, 1860 Branch banks–particularly those distant
from St. Louis–were run as independent fiefs, even issuing their own notes. The
stockholders of a branch bank were essentially franchise operators, who elected the
28
CHAPTER 1:
president and cashier from their number. The cashier was the more important of the two,
responsible for the actual financial decisions of the bank, the acceptance or rejection of
loans and other business transactions and custody of the funds. The cashier’s salary was
typically commensurate to or higher than the president’s. 41 The position of bank
president appears not to have been a full-time job, and the individuals who held those
positions did not think of themselves chiefly in that capacity. Of the men who were bank
cashiers in 1860, eighty percent reported their occupation as such to the census takers.
However, less than a third of the men who were bank presidents in 1860 reported this as
their occupation. 42 The railroad company, with a top-down, authoritarian, line-
management structure, has been proposed as the original model of American corporate
management. However, the management structure of the banks of this period more
closely paralleled the steamboat. The steamboat captain was the owner or part owner of
the boat, but took little part in its active management. The river pilot, nominally the
captain’s subordinate, was the officer actually in charge of the conduct and safety of the
vessel. 43 So it seems to have been with the banks.
Until they reorganized as national banks under the National Banking Act of 1863,
the banks were bound by the statutory requirements of the Missouri Banking Act of 1857,
with regard to capitalization, liquidity, and note circulation. 44 Financial regulation of the
day concentrated more on controlling interest rates to prevent lenders from gouging
borrowers, rather than on overall money supply. 45 Other requirements were minimal.46
The Act of 1857 aimed more at preventing control of the banks by dishonest persons who
29
CHAPTER 1:
would use the bank to defraud the public, than in enforcing sound business practices.
The contained several measures favoring small shareholders, and to keep ownership and
control broadly distributed. 47 This was no idle concern. Ownership of the banks was
different from what would be found today. Rather than fund managers and institutional
investors being the primary holders of equity, the banks were owned by consortia of rich
men, frequently related to one another by blood or marriage. Outstanding stock was
narrowly held; by contemporary standards many of these banks would be classed as
closely-held corporations.
Compared to their modern counterparts, the bankers of the 1860s could make
little use of the data in their own books and records as a guide to decision-making.
Extracting diagnostic information from day-to-day transactions is a relatively new
phenomenon, dating from early in the twentieth century. This has depended on uniform
standards of financial reporting, precise and exhaustive recording of daily data, and a
great deal of computing power. The Civil War-era bankers’ situation was similar to that
of doctors of the same period, attempting to treat an undiagnosed illness. The progress of
a disease could not be accurately tracked; early symptoms would be missed, and periods
of remission taken as recovery. In both medical and banking practice, there was less
early warning and fewer options for redress and ministering. Interventions tended to be
more drastic, and were frequently emergency measures taken during a crisis. The result
was wide swings in performance, and business in general was even chancier than it is
now.
30
CHAPTER 1:
Since possibilities for corrective action were limited, bankers had to use other
means for controlling risk. One possible way was to increase the interest-rate spread,
and charge higher rates on loans to compensate for greater risk of loss. Other ways were
to control risk was to shorten the revenue cycle and make less use of debt capital. The
revenue cycle is the time period between the acquisition of inventory and the collection
of cash from receivables. In the case of a bank, inventory acquisition is replaced by loan
creation. As noted above, bank loans of this period had much shorter maturities. This
tendency to short revenue cycles was reinforced by the agricultural cycle, and is also
characteristic of mercantile rather than industrial capitalism. The large-scale and long-
term financing necessary for industrial manufacturing enterprises, was generally not part
of a bank’s business at this time. Loans, of course, are the source of a bank’s revenue,
and short-term loans must be rolled over or replaced with new ones. Also, bank loan
portfolios were much smaller as a percentage of total assets, than now. b From the
standpoint of debt, banks operated with a much lower degree of financial leverage in the
1860s than in the 1990s. c Debt capital consisted of circulation and deposits, redeemable
in gold or silver on demand. Depositors, if they panicked, could drain a bank in a single
day. Circulation was likewise problematic, depending on public confidence in the bank’s
solvency. The lower use of debt capital gave the banks greater resiliency in times of
disaster. It was probably this that enabled the banks to survive at all, when the war came.
b
Ref. Appendix II.
c
Ref. Appendix III.
31
CHAPTER 1:
Modern information technology enables managers to screen large blocs of
transactions for error, fraud, and high-risk or questionable items. To accomplish the
same ends, bankers of the 1860s had to be hands-on managers in the most literal sense:
Bank lending committees personally each and every promissory note and bill of exchange
in which the bank transacted. In the absence of any delegation of duties, general
authorizations and guidelines for loan approvals, this meant there was an unavoidable
personal dimension to all the business that these banks conducted. The personalities of
the bankers themselves would color everything the banks did, in the same way that any
small business today reflects the personality of its owner.
Regarding honesty and fair dealing, this personal supervision probably worked
well enough given the limited scope of the business. When people have their own money
in the till, loose controls suffice. 48 An important part of the job would be to remain in
constant touch with the market. Since analytical techniques and computing power were
severely limited, the bankers of 1861 would have had to confine their attention to big
things, i.e., availability of cash. In a way, financial management has come full circle in
its focus on inflow and outflow of funds. Information provided by the balance sheet and
the income statement, as based on historical cost and containing noncash items, is relied
on less today than fifty years ago. Financial practice is now more cash-conscious than at
any time since the late nineteenth century. But at that time, owing to the volatility of
both sources and uses of funds and the flying-blind nature of the business, a good bank
would be managed more conservatively than today. A prudent banker stayed good and
32
CHAPTER 1:
far away from the brink of disaster, since he didn’t know exactly where that was. In
modern monetary theory this has been termed the moral hazard dilemma: that is, a
financial institution with a safety net under it will tend to behave more recklessly than
one without.
The banks were smaller in relation to the whole society than today, and typically
only the wealthier classes were customers of the banks’ services. These were the persons
who were accordingly most affected by the banks’ fortunes as the war progressed.
Outside of St. Louis, Missouri in 1860 was overwhelmingly rural. Ninety percent of
Missourians lived on farms or in villages of fewer than two thousand people. Except for
St. Louis there were no cities in Missouri; and only twenty-five towns had more than
three thousand people. After St. Louis the largest town was St. Joseph, with a total
COOPER COUNTY, MISSOURI 1860 CENSUS

MEAN HOUSEHOLD PROPERTY BY DECILE
$16,000
$14,000
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
$0
1ST 2ND 3RD 4TH 5TH 6TH 7TH 8TH 9TH 10TH TTL
REAL PERS
33
CHAPTER 1:
population just under nine thousand. Boonville, the oldest town south of the Missouri
River west of St. Charles, in 1860 had a population of twenty-six hundred. Some towns
where banks were located, such as Glasgow in Howard County, were truly small, with a
total population of little over a thousand. 49
Small towns or no, there was a definite hierarchy with regard to wealth, property
ownership, and kinship. In Missouri’s Little Dixie society was more highly stratified,
compartmentalized, and wealth more maldistributed than today. In Cooper County and
its county seat Boonville, the wealthiest forty percent of the population owned ninety
percent of real and personal property, and the wealthiest ten percent owned fifty-four
percent of total real and personal property. 50 At the other end of the spectrum, the
poorest thirty percent owned no property at all. Slaves, of course, amounting to about
twenty percent of the county’s population, had even less. Immigrant households, which
comprised twenty-four percent of the county total, were virtually unrepresented in the
upper deciles of property ownership. 51 Average property holdings were much lower for
immigrant households than for native-born, averaging $1,729 and $6,115 respectively.
Both the poorest and the richest households in Cooper County in 1860 were native-born.
In the aggregate, the largest portion of the county’s wealth was invested in agriculture,
and fifty-seven percent of the sampled heads of households listed their occupations as
farmer, indicating that many non-farmers lived out of town and in rural areas as well. 52
But the average farming household owned real and personal property of $5,804, only
34
CHAPTER 1:
slightly more than the countywide average of $5,044. The wealthiest occupational
groups were the merchants and professionals, owning aggregate property worth $15,023
and $11,750 respectively, but these groups represented just over seven percent of the
population. 53 ‘Modern’ manufacturing employing free wage labor, was in its infancy in
this period, and free white labor was virtually non-existent in Little Dixie. German
immigrant entrepreneurs were a significant factor in the nascent manufacturing sector. 54
The most extensive manufacturing concern in Cooper County in 1860 was the Boonville
1860/1997 COMPARISON
SHARE OF AGGREGATE PROPERTY/INCOME BY QUINTILE
80% 71.9%
70%
PR
60%
% OP
OFER 47.2%
50%
TOTY
TA/IN 40%
L C 30% 23.0%
O 15.7% 17.9%
M 20%
9.9% 7.7%
10% 4.2% 2.2%
0.3%
0%
1ST 2ND 3RD 4TH 5TH
QUINTIL
CUM INC % TTL PROP %
Wine Company, an incorporated joint-stock company founded by a German immigrant,
Wilhelm Haas. 55
35
CHAPTER 1:
No exact match for the property statistics of 1860 exist, but indications are that
property was even more unequally distributed then than now. Income statistics are a
reasonable proxy for comparison to real and personal property, since a much higher
proportion of people in 1860 were self-employed than today, and their annual income
was directly dependent on their real and personal property holdings. Income statistics by
quintile for the United States in 1997, the most recent year available, show that the top
quintile of income earners commanded a lower proportion of total income than their
counterparts did of real and personal property in 1860. Property distribution in 1860
resembled a sombrero, with a wide, flat brim and a small, high-peaked crown. In 1860
the difference in absolute terms was not as great between richest and poorest as now, but
the largest property owners were far removed indeed from the mass of their fellow
citizens.
Property was concentrated in other ways as well. A disproportionate amount of
property was in the hands of long-time settlers in Missouri who had come from the Old
South and the border slave states. In 1860 twenty-three percent of total census
respondents in Cooper County were born in Kentucky, Virginia, or Tennessee. 56 This,
however, understates the degree of southern dominance. Of native-born heads of
households, over ninety percent were born in a slave state. Of these, forty percent were
born in the border slave states, d predominantly Kentucky and Tennessee. A third were
d
Kentucky, Tennessee, Delaware, Maryland, and Washington, D. C.
36
CHAPTER 1:
born in the Old South, e and sixteen percent were born in Missouri. 57 Aside from these
regional groupings, heads of households born in the four states of Kentucky, Virginia,
CO O PER CO UNTY, MISSO URI 1860 CENSUS Tennessee, and North Carolina
HEADS O F HO USEHO LDS
% OF T OT AL
50% 39.7%
40% 31.9% comprised half of the total
30% 16.6%
20% 3.9% 4.4%
10% 1.7% 1.7% sample. Another way of showing
0%
G
H
W
RI
L
H
H
the strongly regional character of

EN
T
ST
ST
ST
ID
U
A
SO
M
LD
N
P
ID
IS
D
BD
M
O
% FROM U.S. REGION Missouri culture is by listing the
states of origin not represented: Only four percent of persons sampled were born in mid-
Atlantic states f or Midwestern states g. Heads of households born in the Deep South h and
New England i each accounted for less than two percent of the sample. 58
As shown on the accompanying graph, heads of households born in the Old South
and the border slave states were the best-off property owners. Wealth was also stratified
COOPER COUNTY, MISSOURI 1860 CENSUS
MEAN HOUSEHOLD PROPERTY
by length of residence in the
$10,000
$8,000 area. Though almost half of the
$6,000
$4,000
$2,000 individuals sampled in the 1860
$-
census appeared in that census
G
H
W
RI
L
H
H
EN
T
ST
ST
ST
ID
U
A
SO
M
LD
N
P
ID
IS
D
BD
M
O
U. S. REGIONAL ORIGIN
only, this group carried little
e
Virginia, North and South Carolina, and Georgia.
f
New York, Pennsylvania, New Jersey, and Connecticut.
g
Indiana, Illinois, Ohio, Michigan, Minnesota, Ohio, Wisconsin, and Iowa.
h
Alabama, Mississippi, Louisiana, Florida, Arkansas, and Texas.
i
Maine, New Hampshire, Vermont, Massachusetts, and Rhode Island
37
CHAPTER 1:
weight in the economic hierarchy. On average the 1860-only group owned combined
mean real and personal property worth only $2,870, or fifty-five of the county average,
and only forty-two percent of the mean total property of households that appeared in
multiple censuses.
The average Missourian in this period has been described as a Methodist farmer
from Kentucky with 100 acres of land and no slaves. 59 This conceals more than it tells.
Much has been made of American diversity, but this could also be described as
compartmentalization; the coexistence of multiple groups that have little or nothing to do
with each other. This feature of American life was also evident in 1860, though the
CO O PER CO UNTY, MISSO URI 1860 CENSUS

makeup of the groups was
HO USEHO LD PRO PERTY BY LENGTH O F
$10,000
RESIDENCE somewhat different. In this
$8,000
$6,000 western, largely rural county on
$4,000
$2,000
$- the eve of the Civil War, society
1850-70 1850-60 1860-70 1860 TTL
ONLY
was segregated into discrete
NAME APPEARS IN CENSUS
chunks that had only limited
contact with each other, though occupying the same geographic space. Blacks and
immigrants, together comprising about half of the county’s population, were for different
reasons outside of the political and economic mainstream. Blacks, of course, were
completely excluded. Germans, though their politics differed distinctly from the Anglo-
Saxon majority, had not yet coalesced into a political force in their own right, except in
38
CHAPTER 1:
St. Louis. Germans were likewise segregated from the ‘English’ by language, religious
affiliation, occupation, area of residence, (lack of) slave ownership, and wealth. 60
The people who actually mattered to the bankers – and vice versa–were a small
subset of the total population: i.e., white, native-born male heads of household, in the
upper quartile of property ownership. These were men of property, wealthy slaveholding
farmers and merchants, and a handful of doctors and lawyers. They people were
overwhelmingly old settlers, settlers long established in the Boonslick, all of old English
stock and born and raised in the slaveholding states of the middle South. Given the
extreme inequities of property ownership, this was a small group indeed, amounting to
less than six percent of the total population. 61 This elite was more homogeneous than
their modern counterparts, in two respects: first, there appears to have been one single
group in each community that held all the levers of power: political, social, and
economic. Second, the individual members of this group were highly similar
demographically. American society in 1860 was arguably as diverse as it is today,
though its constituent parts were different. But the elite members of that society were
highly homogeneous. What emerges is the picture of a Herrenvolk republic: a society
ruled by a class which is democratic or republican within itself for its own members, but
from which the remainder of the inhabitants are excluded. John Mack Faragher’s Sugar
Creek: Life on the Illinois Prairie paints a similar picture of society in the American
West in this period. Sugar Creek emerges in Farragher’s study as a rude and relatively
stable democracy of property owners in the upper economic brackets, on top of a large
39
CHAPTER 1:
group of rootless, anonymous wanderers. 62 So it seems to have been in Little Dixie. It
was, however, this same elite property-owning class that suffered in the banking crisis
that developed in Missouri during the war, rather than the people stuck on the lower
rungs of the social ladder.
40
CHAPTER 1:
CHAPTER NOTES
1
Wilken, p. 210.
2
Cable, p. 244.
3
Timothy W. Hubbard and Lewis E. Davids, Banking in Mid-America: A History
of Missouri’s Banks, Washington, D. C., Public Affairs Press, 1969, p. 87 – 88.
4
John Ray Cable, “The Bank of the State of Missouri,” (Studies in History,
Economics and Public Law, Volume CII, Number 2, New York, Columbia University,
1923), p. 256.
5
Timothy W. Hubbard and Lewis E. Davids, Banking in Mid-America: A History
of Missouri’s Banks, (Washington, D. C., Public Affairs Press, 1969), p. 87 – 88.
6
Castel, General Sterling Price and the War in the West, p. 7.
7
“An Act to Prevent Illegal Banking, and the Circulation of Depreciated Currency
Within This State,” Enacted December 8, 1855, Journal of the Senate, Adjourned Session
of the 18th General Assembly, Missouri State Legislature, Jefferson City, James Lusk,
Public Printers, 1855, p. 196.
8
St. Louis Triweekly Missouri Republican, 2/1/1861, p. 1.
9
Schumpeter, p. 73.
10
Schumpeter, p. 98.
11
Schumpeter, p. 126. Schumpeter uses capital in the sense of liquid capital; i.e., a
fund of purchasing power. Ibid., p. 120.
12
R. Douglas Hurt, Agriculture and Slavery in Missouri’s Little Dixie, p. 66.
Fellman, Inside War, p. 5. According to no less an authority than Mark Twain, who once
said, “Everything I have ever written goes back to some little village in Missouri.”
13
Hurt, Agriculture and Slavery in Missouri’s Little Dixie, p. 69.
14
Bray Hammond, Sovereignty and an Empty Purse, p. 27.
41
CHAPTER 1:
CHAPTER NOTES
15
Germans virtually never appear as bank customers in any extant records, either
banking or legal. Ref. for example the account books of William H. Trigg and the
account books of Weston Favel Birch, both at the Western Manuscripts Collection,
16
This conclusion is based on my own research on the banks’ clients, tracing loan
signatories through property and census records.
17
Davis R. Dewey, State Banking Before the Civil War (Washington, D. C.,
National Monetary Commission, 1910), p. 154.
18
Homer, Sidney, and Richard Sylla, A History of Interest Rates, New Brunswick,
Rutgers University Press, 3rd Edition, Revised, 1996, p. 291ff. Given the vicissitudes to
which merchant capitalism was subject, problems of transportation, communication,
valuation and conversion, accident, war and act of God, this should not be surprising.
Over the nineteenth century real interest rates in the United States, with many
fluctuations, tended downward.
19
Dewey, State Banking Before the Civil War, p. 182 – 4.
20
Bray Hammond, Sovereignty and an Empty Purse, p. 76.
21
Dewey, State Banking Before the Civil War, p. 183.
22
In this period Massachusetts, Pennsylvania, and New York banks were likewise
limited in the amount of capital they could invest in real estate. State Banking Before the
Civil War, p. 45 – 6. On the other hand some banks, particularly in the south, had been
formed with aid to agricultural improvements in mind, such as the Union Bank of
Louisiana, and the Planters’ Bank of Mississippi. Ibid., p. 47. An Act to Regulate Banks
and Banking Institutions and to Create the Offices of Bank Commissioners, Op. Cit.,
Section 26.
23
Ref. for instance John Ray Cable, “The Bank of the State of Missouri,” (Studies in
History, Economics and Public Law, Volume CII, Number 2, New York, Columbia
University, 1923), p. 207 – 8.
24
Ref. Louis Atherton, “The Pioneer Merchant in Mid-America,” The University of
Missouri Studies XIV, Number 2 (April 1, 1939), Columbia, University of Missouri
Press. That such a trade was vitally necessary to the merchants and farmers of the state
can be seen by what the merchant James Aull had to go through.
42
CHAPTER 1:
CHAPTER NOTES
25
Contact with outside sources of information and connections with banks in distant
commercial locations have been important banking functions since earliest times. In
antebellum Missouri, besides contact by letter and word of mouth with their counterparts
at corresponding banks, the banks’ chief source of information about financial markets
was the newspapers. St. Louis was the funnel through which financial information
passed, and the leading newspapers of the city would regularly report financial news.
Mostly this took the form of quoting portions of articles from other newspapers, usually
two to three per issue. Ref. also note to Chapter 5.
26
For example, “In the exchange market the rate was firmly fixed at 5 per cent.
premium for Eastern sight, and 6 for New Orleans. . . . Gold is at 4½ premium, and silver
2.” St. Louis Missouri Republican, January 25, 1861, 3-5. Translated, this means that
$100 in notes issued by reputable, secure, first-rate New York banks may be purchased
with $105 in Missouri money issued by banks of the same character. Similarly, $106 in
Missouri money buys $100 in New Orleans money, $104.50 in Missouri money buys
$100 in gold, and $102 in Missouri money buys $100 in silver.
27
Perry McCandless, A History of Missouri, Volume II: 1820 – 1860, (Columbia,
University of Missouri Press, 1972, Chapter 6, “Urban Development”), p. 150. Before
the telegraph, obtaining current information about business conditions, interest rates and
banknotes value in distant cities was a real problem for bankers, something they were
usually only able to accomplish by having correspondents in these places. Ref. for
example Brown, John Crosby, A Hundred Years of Merchant Banking: A History of
Brown Brothers and Company, Brown, Shipley & Company, and the Allied Firms, New
York, privately printed, 1909, p. 19ff.
28
Margaret Myers, A Financial History of the United States, p. 132.
29
Myers, p. 130.
30
Richard H.Timberlake, Monetary Policy in the United States. Quoted in Roger
LeRoy Miller and David D. Van Hoose, Essentials of Money, Banking and Financial
Markets, p. 301.
31
Margaret Myers, A Financial History of the United States, p. 134.
32
A. Barton Hepburn, A History of Currency in the United States (New York, The
MacMillan Company, 1915 Revised edition), p. 66 – 7.
43
CHAPTER 1:
CHAPTER NOTES
33
When the Civil War broke out, the Independent Treasury Act proved to be an
impediment to the federal government’s efforts to finance the war, and the law was
scrapped in very short order. Bray Hammond, Sovereignty and an Empty Purse: Banks
and Politics in the Civil War, p. 67.
34
Quoted in Davis R. Dewey, State Banking Before the Civil War (Washington, D.
C., National Monetary Commission, 1910), p. 111.
35
William H. Dillistin, Bank Note Reporters and Counterfeit Detectors, 1826 –
1866 (New York, The American Numismatic Society, 1949), p. 1.
36
Circulation and demand deposits are the major components of M1. Including
outstanding state-banknote circulation, on-hand deposits, and an estimate of federal
money circulating in Missouri, M1 stood at about $10.1 million in 1860, or about $8.60
per capita. As of December 1999 M1 equalled $1.147 trillion for the United States as a
whole, or $4,186.50 per capita. Adjusting for inflation, this amounted to $161.22 in 1860
dollars. Sources: St. Louis Federal Reserve Bank, U. S. Bureau of the Census. 1860
Missouri bank data compiled by the author.
37
Hammond, p. 93.
38
Lewis E. Atherton, The Pioneer Merchant in Mid-America, Columbia, University
of Missouri Studies XIV, Number 1 (January 1, 1939), p. 107.
39
Besides settlement of monetary debts, this was the time for renewal of contractual
agreements of all sorts, including farm tenancies and the hiring out of slaves. R. Douglas
Hurt, Agriculture and Slavery in Missouri’s Little Dixie (Columbia, University of
Missouri Press, 1992), p. 242.
40
John Ray Cable, “The Bank of the State of Missouri,” (Studies in History,
Economics and Public Law CII, Number 2, New York, Columbia University, 1923), p.
219.
41
Officers’ salaries in 1856 at Fayette, for example, ranged from $550 per year for
the President, $1400 for the Cashier, $850 for the clerk, and $200 for the night
watchman. Cable, Op. Cit., p. 222. Note that the clerk earned a higher salary than the
president.
42
Eighth Census of the United States.
44
CHAPTER 1:
CHAPTER NOTES
43
Ref. for example Mark Twain’s description of the captain’s authority: “The
captain could stand upon the hurricane deck, in the pomp of a very brief authority, and
give him five or six orders while the vessel backed into the stream, and then that
skipper’s reign was over. The moment that the boat was under way in the river, she was
under the sole and unquestioned control of the pilot. He could do with her exactly as he
pleased, run her when and whither he chose, and tie her up to the bank whenever his
judgment said that the course was best. His movements were entirely free; he consulted
no one, he received commands from nobody, he promptly resented even the merest
suggestions. Indeed, the law of the United States forbade him to listen to commands or
suggestions, rightly considering that the pilot necessarily knew better how to handle the
boat than anybody could tell him.” Mark Twain, Life on the Mississippi, p.167.
44
There were only a few specific financial standards stipulated in the Missouri
Banking Act of 1857. Section 30, prohibited any bank chartered under the Act from
employing more than five-eighths of its paid-in capital in dealing in exchange. Under
Section 33, banks could only charge by way of interest or discount up to 6% per year on
paper under 120 days until due; 7% on paper 120 days to 6 months; apparently does not
say anything about interest rates after that. Section 34 allowed semiannual dividends to
be declared on net profits, but dividends could not impair capital stock. Other than these,
the only specific financial requirements are that a bank must in the first year of business
operation issue notes of circulation for no more than $2 of notes for each $1 of capital
stock paid in, in gold or silver. After the first year but before two years, that circulation
may be increased to $2.50 for every dollar of capital paid in. After two years, the amount
of circulation may be increased to $3 for every dollar paid in. And the amount of gold
and silver on hand shall at no time be less than 33 1/3 % of the amount of notes of said
bank of circulation (Section 37, p. 11). To summarize, there are two conditions which
the banks’ circulation of notes must meet. The first was based on the amount of capital
stock actually paid in gold and silver; the second was outstanding circulation of
banknotes has to be never more than three times the amount of gold and silver on hand.
This would tend to make note circulation–so long as it was reaching the upper limits of
what’s legally allowed, to be pretty volatile, depending on the amount of gold and silver
the bank had on hand. The more money that loaned out to customers, the less would be
allowed in circulation, interestingly enough. The contemporary concern of regulators
with the relationship between deposits, reserves, and the size and overall risk of the loan
portfolio is not to be found. Deposits, the real danger to the banks of 1861, were virtually
ignored by the regulators and financial writers in the bigger newspapers, and the trade
press such as Bankers Magazine.
45
Government regulation of interest rates to make sure that only ‘fair’ rates were
charged goes back to the Middle Ages, and is still practiced in the Islamic world. In the
45
CHAPTER 1:
CHAPTER NOTES
antebellum period many states enacted restrictions on rates of interest banks could legally
charge. Ref. for example State Banking Before the Civil War, p. The primacy of the
money supply is a much more recent concept. “. . . On October 6, 1979, [Paul] Volcker
announced that the money supply would cease to fluctuate with the business cycle;
money supply would be fixed, and interest rates would float. . . . [T]he shift in the focus
of monetary policy meant that interest rates would swing wildly.” (Michael Lewis,
Liar’s Poker: Rising Through the Wreckage on Wall Street, New York, W. W. Norton &
Company, 1989, p. 35).
47
The maximum ownership allowed to any one individual by the Act was 10% of
the outstanding total shares. Likewise, speculators are penalized in that shares had to be
owned for three calendar months before they could be voted. Banking regulation of the
day was more concerned with circulation, paid-in stock, and specie holdings than it was
with deposits. An Act to Regulate Banks and Banking Institutions and to Create the
Offices of Bank Commissioners, passed by the 19th General Assembly, begun and held at
the City of Jefferson, on Monday, the 29th day of December 1856, St. Louis, George
Knapp & Co., Printers and Binders, 1858.
48
For a modern example, ref. Michael Lewis, Liar’s Poker: Rising Through the
Wreckage on Wall Street (New York, W. W. Norton & Company, 1989), p. 109.
49
50
The following analysis is based on a sample of 303 heads of households from the
Cooper County, Missouri 1860 Census.
51
Almost all of the immigrant population came from Germany. Among the
Germans, Prussians formed the largest single group, followed by immigrants from
Bavaria, Hanover, Baden, and Hesse-Darmstadt, with lesser numbers from Nassau,
Wurttemburg, Saxe-Coburg, Mecklenburg and Saxony. Other countries of origin
reported were England, Ireland, Scotland, and Switzerland. The foreign-born population
tended to be concentrated in certain pockets in the county, especially the City and
Township of Boonville, and Clear Creek and Pilot Grove Townships. Source: 1860 U.
S. Census for Cooper County, Missouri. Immigrant households were spread over a
narrower range of property ownership, from high to low: very few immigrant households
appeared either in the poorest two or the richest two deciles of the population sample.
The nineteenth–century adage used to describe Missouri Germans, ‘Seldom rich, never
poor’ seems to have been accurate. Source: 1860 U. S. Census for Cooper County,
Missouri.
46
CHAPTER 1:
CHAPTER NOTES
52
Interestingly, in this predominantly rural county, Germans tended to be less likely
to go into farming than were native-born residents. Immigrants were most likely to work
in skilled trades, building trades, or as laborers. Immigrants dominated certain trades,
such as brick- and stonemasonry, shoemaking and baking. Source: 1860 U. S. Census
for Cooper County, Missouri.
53
Except as clergymen, Germans were virtually absent from the learned professions.
Source: 1860 U. S. Census for Cooper County, Missouri.
54
The 1860 Census Schedule for Products of Industry (Quoted in Dyer, p. 60) lists
44 manufacturing concerns in Boonville, employing 182 men and 16 women. Almost all
of these were small workshops. The total value of the financial investment in these
concerns was $125,000, and altogether they generated an annual product off $280,000.
Of these, 23 firms generated annual revenues of $229,000. The largest of these
enterprises were German-owned, with the exception of the Boonville Pottery Works,
which was founded in the early 1830s by a Virginian, Marcus Williams Sr., who sold the
works to the German George Vollrath in 1840. Dyer, Boonville: An Illustrated History,
p.200.
55
Nathan H. Parker, Missouri as it is in 1867 (Philadelphia: J. B. Lippencott & Co.,
1867), p. 237.
56
Source: Manuscript Census Schedules, Population, 1860; Eighth Census:
Population, 1860, pp. 274-77. Quoted in Hurt, Op. Cit., p. 55.
57
Source: 1860 U. S. Census for Cooper County, Missouri.
58
59
Michael Fellman, Inside War, p. 7.
60
Indicative of the degree of separation between the German immigrants to the
region and the Anglo-Saxon residents was the rarity of intermarriage. There was
virtually no intermarriage between Germans and native-born residents, or Germans and
other immigrant groups. English- and German-surnamed Missourians of the period
frequently entered into business partnerships with each other, but intermarriage was at
least a generation off.
61
Of Boonville’s population in 1860 1,114 were white males, or forty-three percent
of the population. Of these, only about 675 were between the ages of 21 and 80, who
47
CHAPTER 1:
CHAPTER NOTES
could be expected to take an active role in the community. About 565 of these were
native born; the remainder being mostly Germans and counting for little in the social
scale. The top quartile of this last group would number no more than 140, or less than six
percent of the total population of Boonville. Source: 1860 U. S. Census for Cooper
County, Missouri.
62
This view of the relative stability of the upper tier of society and the mobility and
transience of the rest has been noted in other studies of the American frontier. Ref. for
example John Mack Faragher, Sugar Creek: Life on the Illinois Prairie (New Haven,
Yale University Press, 1986).
48
CHAPTER 2:
MISSOURI BANKERS – DEMOGRAPHICS AND PSYCHOGRAPHICS
The bankers were highly influential people in their local economies, but the scope
economic life itself was much more restricted than it is today. For one thing, the use of
circulating money was much less common in 1860. Given the absence of any federal
currency and the limitations of all sorts of communication, it is unlikely that the currency
of the Missouri banks circulated very far from St. Louis and Little Dixie, where almost
all the banks were located. Even in the banks’ home counties, many households were
self-sufficient and made sparing, if any, use of banking services. The bankers’ influence
in community life, though substantial, was by no means hegemonic. Moreover, the
nature of that influence in 1860 was different; bankers of 1860 were men of a different
stamp than their modern counterparts. Contemporary banks tend to be stereotyped as
vast bureaucratic institutions managed by colorless organizational men. Whether this
was ever true is moot; but it was definitely not so in Missouri in 1860. Missouri banks of
1860 were innovative, start-up organizations, and the bankers were entrepreneurs.
Even though the role of economics in this period was more restricted, the bankers
exerted considerable personal influence in other areas of community life. In social,
political, religious, and fraternal affairs as well, these were men of weight and worth.
The banker was often one of the original pioneers to the area. Of the town’s wealthy
men, he was one of the wealthiest. Of the slaveowners, the banker was one of the two or
three who owned the most slaves. The bankers of Little Dixie had frequently founded
and continued to manage extensive mercantile establishments, and held both elective and
49
CHAPTER 2:
appointive political offices. Many had also founded towns, counties, colleges, churches,
and missions. Judge Irvine O. Hockaday, later president of the Fulton branch of the
Western Bank of Missouri, had been one of the original founders of Callaway County,
and at one point had held most of the county offices himself. 1 John Calvin McCoy,
President of the Southern Bank of St. Louis branch at Independence was a co-founder of
Westport and Kansas City. 2 Captain William David Swinney and William F. Dunnica,
respectively the president of the Western Bank branch and cashier of the Exchange Bank
branch at Glasgow, were co-founders of that town. 3 This list could be extended
considerably. In a very literal sense the bankers had made the world in which they lived.
Demographically, the bankers of 1860 were almost interchangeable with one
another. The occupation itself required a common expertise and frequent intragroup
communication, and one would expect this group to possess a high degree of internal
consistency: for individuals to be personally known to each other, and interrelated by a
multitude of kinship, marital, business, and social ties. This was true, to a surprising
extent. The bankers were almost uniformly old settlers, native-born, of British or Scotch-
Irish ancestry, slaveholders born in slave states, and pro-southern. 4 They were
Democrats, Masons, and a very high proportion of them were related by blood or
marriage to other Missouri bankers. They were mature men in their middle forties, in a
time and place where average life expectancy was about fifty. 5 The bankers’ overall
demographic uniformity, from the viewpoint of modern American society, is extreme.
Mark Twain had this in mind when he described a typical home of a prominent citizen
50
CHAPTER 2:
along the Mississippi, concluding, concluding “That was the residence of the principal
citizen, all the way from the suburbs of New Orleans to the edge of St. Louis.” 6 The
owners of these mansions were commonly, in Twain’s phrase, “tinselled with the usual
harmless military and judicial titles of that old day of cheap shams and windy pretence.” 7
Except for the State Bank, banks of issue were prohibited in Missouri prior to the
Missouri Banking Act of 1857. The men who became bank officers after that date came
from other occupations. The Little Dixie branch bankers’ career progression was
commonly from farming to clerking, to opening a store, to the wholesale grocery or
drygoods business, and finally into banking. The majority had first made their money in
merchandising. Merchants on the western frontier occupied an important and distinct
place in society, as the centers of all commercial transactions of any importance, politics,
banking, and public opinion. John Beauchamp Jones, writing in 1849, described the
merchants of the west as constituting
“. . . a distinct class of society. This class is not only important from its
numbers, but powerful and influential from its intelligence, enterprise, and
wealth. . . . He [the merchant] is a general locum tenens, the agent of
everybody! And familiar with every transaction in his neighborhood. He
is a counselor without license, and yet invariably consulted, not only in
matters of business, but in domestic affairs. Parents ask his opinion before
giving their consent to their daughters’ marriages; and he is always invited
to the weddings. He furnishes the nuptial garments for both bride and
groom, and his taste is both consulted and adopted. Every item of news,
not only local, but from a distance,–as he is frequently the postmaster, and
the only subscriber to the newspaper–has general dissemination from his
establishment, as from a common center; and thither all resort, at least
once a week, both for goods and for intelligence” 8
51
CHAPTER 2:
Since credit and financing facilities were primitive or non-existent, from the
earliest days of settlement merchants were forced to perform banking functions for their
customers, such as the extension of credit, obtaining financing in distant cities, and
transferring funds. 9 Moving from merchandising into banking thus represented a natural
step. 10 Starting in St. Louis and moving farther west as the tide of settlement advanced,
merchants were a conduit through which the agricultural products of the region made
their way east, and manufactured items made their way west to supply frontier farmers
and the Santa Fe trade. This was an appropriate training-ground for bankers in
antebellum Little Dixie, because these were the banking services that would be required
by the bankers’ future clients.
Though the branch bankers became wealthy men through their own efforts, most
came from families that were at least middle-class, some of them prominent. Forty-seven
percent came from families that had at least some money to launch them in life. In an
age of little formal education sixty-nine percent of the branch presidents had some higher
education, including a number of formal college degrees. Of the branch cashiers, forty-
three percent had family money, and fifty-six percent had some higher education. Of
these last, the largest number had trained as lawyers. 11 The branch bankers – both
presidents and cashiers – tended to have been born on farms in slave-holding states of the
Old South. 12 Their pattern of emigration was from farm to frontier, or frontier to
frontier. 13 The branch bank presidents and cashiers were in the wealthiest five percent of
the property owners in their respective counties; presidents reporting average combined
52
CHAPTER 2:
real and personal property worth $95,345 in 1860, and cashiers $34,995. 14 This was a lot
of money in 1860. a As their business interests matured these men consolidated their
positions through marriage. Where spouses and family data could be identified, ties of
marriage or blood related one-third of the branch presidents and almost half of the branch
cashiers with the families of other bank officers. Their influence extended to the political
realm; sixty-two percent of the branch presidents and thirty-seven percent of the branch
cashiers held or had held political office. 15
As mentioned in the previous chapter, the cashiers seem to have been responsible
for the day-to-day operations of the bank; the president was a part-time position. Most of
the branch bank presidents reported their occupation to the census-taker in 1860 as
farmer, though many had come to farming after having been merchants. Farmers they
may have been, but on a grand scale and owning sufficient slaves to qualify them as
planters in contemporary historical taxonomy. For example, Major Daniel Berry,
president of the Springfield branch of the Bank of the State of Missouri owned forty-three
slaves in 1860. Dabney C. Garth, president of the Glasgow branch of the Exchange Bank
of St. Louis, owned twenty-two; Alfred Lacey, president of the Cape Girardeau branch of
the Bank of the State of Missouri eighteen; James Nelson, president of the Boonville
branch of the Bank of St. Louis thirty-six, William Breathitt Sappington, president of the
Arrow Rock branch of the Bank of the State of Missouri thirty-eight, and John Bird,
president of the Charleston branch of the Bank of the State of Missouri, thirty-seven. 16
a
See presentation of property statistics for Cooper County in previous chapter.
53
CHAPTER 2:
However they had started, many of these men had struggled hard to reach their
positions. David Waldo, born on a farm in Harrison County, Virginia, by turns farmed,
rafted logs down the Ohio, Missouri and Mississippi Rivers to New Orleans, held
multiple county offices simultaneously, studied and practiced medicine, traded in Santa
Fe and California, fought Indians, captained a company of Missouri volunteers in the
Mexican War under Colonel Alexander Doniphan,
freighted mail and military supplies for the United
States government, and speculated in real estate. 17
Waldo may not have been everybody’s idea of a
bank cashier, but so he was, of the Southern Bank of
St. Louis branch at Independence. The Methodist
Reverend Thomas Johnson, from 1862 to 1864

David Waldo, 1802 - 1878
President of the Kansas City branch of the Union
Bank of St. Louis, came west in the 1830s to minister to the Indians and founded
Shawnee Mission, Kansas Territory. 18 In 1854 Johnson accompanied twenty Indian
chiefs to Washington, D.C. to lay their case before the United States Congress. 19 A
strong anti-Benton Democrat, in March 1855 he presided over the House of
Representatives in the proslavery First General Assembly of Kansas, that body convening
in his home. Johnson County, Kansas was named for him. With Hiram Northrup and
Jesse Riddlesbarger, two other prominent Kansas City bankers, Reverend Johnson
founded Kansas City’s first newspaper, the Kansas City Enterprise, which was
54
CHAPTER 2:
Democratic and strongly pro-southern in its stance. 20
Johnson’s son William was a student at Emery and Henry
College in Virginia and joined the Washington Mounted
Rifles at the outbreak of the war. In 1862 he returned to
the west and joined Colonel Upton Hayes’ unit, in which he
served until the end of the war, and was wounded several
times. Reverend Johnson was murdered by bushwhackers Reverend Thomas

Johnson, 1802 - 1865
in January 1865 at his home in Westport. 21
Other representative branch bankers of this period were Captain William David
Swinney and Colonel Edward Cresap McCarty. From 1860 to 1863 Captain Swinney
was President of the Glasgow branch of the Western Bank of Missouri, and Colonel
Edward Cresap McCarty was Cashier of the Kansas City branch of the Mechanics Bank.
Swinney and McCarty exemplify a number of important characteristics of Missouri
bankers of 1861: common ethnicity, early
immigration to Missouri from the seaboard south,
intermarriage, pro-southern politics, and their ouster
and diaspora during the War.
Captain Swinney was born in Campbell
County, Virginia and came with his family from
Lynchburg, Virginia in 1832. He settled a large
Captain William David 55

Swinney, 1797 – 1863
CHAPTER 2:
plantation, Sylvan Villa, b in Howard County, three miles east of the present town of
Glasgow, of which he was one of the original proprietors. Here he raised and
manufactured tobacco, a business he had engaged in during his years in Virginia. At one
time he owned four tobacco factories located in Glasgow, Fayette, Salisbury, and
Huntsville. While thus engaged his shipments extended to all the markets of the world.
Captain Swinney’s granddaughter, Berenice Morrison-Fuller, in her
reminiscences of plantation life (her own phrase) some seventy-five years later, wrote,
“These large farms were almost self-sufficing. Everything that could be raised or made
for home consumption was brought to a fine art.” 22 In 1860 Sylvan Villa produced 7500
bushels of Indian corn, 500 bushels of oats, 270 pounds of wool, 1000 bushels of Irish
potatoes, and 30 bushels of peas and beans. 23 Besides commerce, religion and education
were Captain Swinney’s chief interests. He was a founder of Central College in Fayette;
the college’s first president, Dr. William A. Smith, was an old friend of Swinney’s from
his Lynchburg days. 24 The Swinneys were kin by blood and marriage with the Morrison
family of Philadelphia and St. Louis, which connected them to John J. Anderson, founder
and president of the Bank of St. Louis. c
Captain Swinney’s sentiments toward slavery are illustrated by an advertisement
he placed in the Fayette, Missouri Boon’s Lick Times in November, 1845, reading in part,
“My man Beverly and his wife Rachel, left home on last Monday night, without any
b
See frontpiece, p. .
c
See below, p. .
56
CHAPTER 2:
known cause, not having had an angry word spoken to either of them; hence I presume
their object is to make for a free State, possibly aided by some abolitionist.” 25 In 1855
Captain Swinney was a Howard County delegate to the Proslavery Convention in
Lexington, Missouri, and the 1860 census for Howard County listed him as the owner of
seventy-nine slaves. 26 When war broke out he sent fifty of these to Texas, so that if the
south won the war, these might be saved to him. 27 His nephew, Captain S. W. Swinney,
C.S.A., was captured in Howard County in December 1861. 28 While under sentence of
death in Alton Military Prison in 1862, the younger Swinney authored three manuscript
books of poems and sketches of Confederate generals and of the Alton prison. He and
thirty-five fellow prisoners escaped by tunneling under the walls and swimming the
Mississippi and Missouri Rivers. 29 On his death in June 1863, the elder Captain Swinney
bequeathed an estate of $400,000. 30 The Swinney family home, Sylvan Villa, was still
standing in 1940, though much neglected. It has since been razed, and the family has
vanished from the area.
Colonel Edward Cresap McCarty was born in Hampshire County, Virginia and
moved with his family to Saline County, Missouri in 1829. Over the next three decades
he farmed, engaged in the Santa Fe trade, operated a hotel, was in the commission and
forwarding business, and involved in local politics. 31 In 1830 McCarty’s sister Elenora
married Greenup Bird, later Cashier of the Farmers Bank of Missouri at Lexington and
during the War an outspoken Union man. 32 McCarty was elected the Whig
representative from Jackson County in August 1854. 33 On the party’s collapse he
57
CHAPTER 2:
became a Democrat. 34 In July 1855 he was a delegate from Jackson County to the
Lexington Proslavery Convention. 35 In 1856, as President of the Kansas Law and Order
party, he appealed to Missouri for men and provisions for defense against attack by
General Lane’s paramilitary forces. 36 In 1857 McCarty moved to Kansas City and
entered into the commission and forwarding
business. Soon after, he was elected cashier of
the branch of the Mechanics Bank of St. Louis. 37
He was forced to resign from this position and
from the state legislature in 1863, because of his
Southern sympathies. In later years he lived on a
farm near Clinton, Missouri. 38
Though by 1860 they had arrived at the

Colonel Edward Cresap
McCarty, 1805 - 1885 same place, St. Louis bankers tended to have
come to their positions from different places than branch bankers in Little Dixie, and by
different routes. Regarding their origins, antebellum St. Louis bankers were a somewhat
more diverse group. A larger proportion of the St. Louis bankers were born in non-
slaveholding states. 39 Still, the majority of the St. Louis bankers owned slaves, in a city
where slaves constituted a tiny percent of the population. 40 More than the branch
bankers, the prewar St. Louis bankers had engaged in a variety of financial pursuits
besides banking, i.e., trade finance, railroad promoting, and insurance. 41 The St. Louis
58
CHAPTER 2:
bankers were men of considerable financial experience, given the city’s important
position in the north-south trade downriver to New Orleans. Like the branch bankers, the
St. Louis bankers had been in Missouri for some time–sixteen years on average. Yet this
average number masks a wide variation in length of sojourn in Missouri. The branch
bankers were almost uniformly of very long tenure in the state, but three of the seven St.
Louis bank presidents of the 1860–1862 period had been in St. Louis for five years or
less. Only one of the seven St. Louis bank presidents was married into the family of
another banker. 42 Where spouses’ maiden names could be determined, fully half of the
St. Louis bank presidents married into the old French Creole families. 43 The French
writer Auguste Laugel, who visited St. Louis in 1864, described the French community
there as rich and esteemed, but reclusive, irrelevant, and clinging to slavery and their
traditions. He was chagrined that they “had never given a statesman to the Republic,”
lacked political influence, and were ruled by people they barely knew, if they knew them
at all. 44 That the bankers chose to marry into the French Creole elite gives a strong
indication of what kind of society to which the bankers aspired.
St. Louis bank presidents of the 1860–1862 period were, like the branch bankers,
in their middle forties.45 Thirty-three percent were born in a large city, New York,
Philadelphia, Baltimore, or Washington D.C. This city-to-city migration pattern
distinguished St. Louis bankers from their branch brethren: Bankers born in cities did not
emigrate to the frontier, later rural, parts of the state. 46 In 1860 St. Louis bank presidents
reported average combined property worth $61,675. 47 These figures are artificially low,
59
CHAPTER 2:
however. The wealthiest member of this group, Robert A. Barnes, president of the Bank
of the State of Missouri, had by 1860 amassed a personal fortune of over $1 million and
reported zero real and personal property to the
census taker. 48 St. Louis, with a complex urban
society and heterogeneous population, did not have
the simple unitary power structure found in the
small towns of Little Dixie. None of the St. Louis
bankers came from family money or possessed a
higher education. However important they may
have been in financial circles, none of them held

Robert Barnes, 1808 – 1892
political office. Oddly, Primm, in The Lion of the Valley: St. Louis, Missouri, does not
list any St. Louis bankers in the first rank of City businessmen. Even Barnes, president
of the State Bank through the Civil War and arguably the most important financier in the
state, escapes Primm’s notice. 49
John J. Anderson typifies the St. Louis bankers of the late antebellum period.
Anderson was one of the original organizers of the Bank of St. Louis in 1857, and was its
president in 1860–1861. Anderson was born in Cahokia, Illinois, of French Creole
ancestry and reared and educated at Belleville. He came to St. Louis as a young man and
in his early years was a successful merchant. In 1835 he married Miss Theresa Billon of
Philadelphia, cousin of Louis Billion, later the cashier of the Bank of St. Louis. 50 In 1842
60
CHAPTER 2:
Anderson met with financial losses which forced him to start over, and with the backing
of Joseph S. Morrison of Pennsylvania, founded the private banking house of John J.
Anderson & Company. Anderson also promoted and helped finance the Ohio &
Mississippi Railroad, the Pacific Railroad, the Iron
Mountain Railroad, and the North Missouri
Railroad. 51 In November 1860 Missouri Governor
Stewart sent the Missouri State Militia to patrol the
Kansas borders and put down Jayhawkers.
Anderson joined the Southwest Expedition, as it
was called, as Major and Paymaster General. Not
finding any Jayhawkers, the Expedition returned to
St. Louis, only to be arrested at Camp Jackson by John J. Anderson, 1813 – 1891
Nathaniel Lyon’s German militia on May 10, 1861. 52 Anderson was exchanged in
October 1861 by agreement with General Sterling Price for Union prisoners captured by
Price at the Battle of Lexington, Missouri. 53 The unsettled conditions of the war
bankrupted Anderson’s banking house, and he moved to New York City during the war.
Anderson’s son John remained behind, serving as a Private in Company I, First
(Confederate) Northeast Missouri Cavalry. In New York Anderson Senior founded
another banking concern, going bankrupt yet again in 1867. Recalling his earlier
troubles, commentary by the St. Louis newspapers was not kind. 54 Anderson died in
New York at the age of seventy-eight.
61
CHAPTER 2:
Another representative St. Louis banker of the period was John A. Brownlee,
president of the parent branch of the Merchants Bank of St. Louis at the outbreak of war
in 1861. Brownlee was born in 1819 in Basking Ridge, New Jersey. His father was a
distinguished Presbyterian clergyman, graduate of the University of Glasgow and later
the president of Rutgers College. 55 In 1835
Brownlee was apprenticed to the wholesale silk
business in New York City with Throckmorton &
Co., for three years. He came to St. Louis in
1839, after having spent a year in Chicago. He
then commenced as clerk in a drygoods for of
Peter E. Blow, later known as the firm of Blow &
LeBaume. 56 Brownlee became a partner in the
John A. Brownlee, 1819 – 1861 firm, later purchased its entire stock and continued
the business himself. By 1860 Brownlee was president not only of the Merchants Bank,
but also of the Millers and Manufacurers’ Insurance Company. Prior to the Civil War he
showed little interest in politics, except to serve in January 1856 as President of Missouri
state council of the American Party. 57 His sympathies, however, were decidedly with the
South. In early 1861 newly elected Governor Claiborne Fox Jackson appointed
Brownlee to the St. Louis Board of Police Commissioners, as part of his attempt to take
control of that city. In mid-August, after open hostilities had broken out, Brownlee was
arrested by the military authorities in St. Louis and charged with aiding and abetting the
62
CHAPTER 2:
rebellion. 58 He was released a week later, on condition that he leave St. Louis, and not
return without permission of the military commandant of the place. 59 He remained in St.
Louis anyway and died less than two months later, possibly by suicide. 60
Over eighty percent of the bank presidents and cashiers in both St. Louis and the
branches owned slaves, a far higher proportion than the population in the state at large. 61
Aggregate census statistics indicate that slavery in Missouri was in decline by 1860, and
this was true of the bankers as well. Overall slave ownership dropped among the group
from 1850 to 1860, but the magnitude of the decline was masked by the accession to the
census tally of younger men entering their peak earning years and acquiring slave
property. Of the bankers who were at least forty years old in 1850, the decline in slave
ownership is precipitous. David Hickman of Columbia went from twenty-four slaves in
1850 to none in 1860; Major Daniel Berry of Springfield owned seventy-two slaves in
1850 and forty-three in 1860. James Atkisson of Warsaw went from ten slaves in 1850 to
four in 1860. A few large operators got larger; James M. Nelson of Cooper County
increased his slave holdings from sixteen in 1850 to thirty-six in 1860. 62 But this was
unusual. Except for the younger men, who were presumably acquiring property of all
sorts, the overall trend among the bankers was to disinvest in the peculiar institution.
Slavery was by no means dead among this group in 1860. But the numbers do show an
absolute decline in the number of slaves owned, with the remaining slaves concentrated
among fewer owners. Certainly the bankers had no moral objection to slavery. Except
for David Hickman, by the outbreak of the war in 1861, the bankers still owned slaves,
63
CHAPTER 2:
though not as many. Nor was economic hardship the cause of this movement away from
slavery. The 1850s were salad days for the bankers, and the panic of 1857
notwithstanding, by the dawn of the new decade they were doing very well indeed. The
decline in the bankers’ slave holdings was probably economically motivated. Slaves
were expensive property, and the bankers preferred to invest in the new industries of
banking and railroads, rather than in agriculture.
Until fairly recently, entrepreneurs were a largely unrecognized type of leader. 63
Entrepreneurship was not considered as a central factor in an important economic work
until Schumpeter’s Theory of Economic Development, first published in English in 1934.
Schumpeter’s argument is, briefly, that entrepreneurship is the most important factor in
economic development and attendant social change. 64 New products do not
spontaneously arise; rather, producers change, and educate consumers. Entrepreneurs
thus play a formative role in societal development. 65 This view, since the 1930s an
important theme in Anglo-American economic thought, reached a wider audience of
policymakers in the 1960s with W. W. Rostow’s book, The Stages of Economic Growth.
Entrepreneurship is now considered vital to the health of any economic system, including
the current success of the American economy and also as a factor in the economic
development and prospects of traditional societies. Major strategies of the World Bank
and the United States Agency for International Development in assisting traditional
64
CHAPTER 2:
societies to transition into market-oriented money economies are to form credit unions
and other grassroots financial institutions,d and to foster entrepreneurship.
As entrepreneurs, a great deal can be inferred about what sort of men these
bankers were. In recent years entrepreneurship has received considerable attention, both
academic and popular. Most recent economic studies have restrictively focused on
industrial entrepreneurship and high technology. 66 The Missouri bankers were highly
innovative entrepreneurs, though not in the area of technology. Missouri’s economy at
that time was of an early-modern character, consisting of agriculture and
merchandising. 67 As mentioned above, most of them had come out of the wholesale
merchandising business before entering banking, though the branch bankers were
frequently invested in slavery and agriculture by the time the War came. A few bankers
did other things, but they were entrepreneurs as well. Before getting into banking, David
Waldo made his money in real-estate speculation and government freighting. William
Breathitt Sappington in Arrow Rock assisted his father Dr. John Sappington, in selling
the latter’s invention, Sappington’s Fever Pills, a patent medicine that was actually
efficacious. 68 The Missouri bankers also demonstrated a classic entrepreneurial
behavioral pattern: They had made their money through their own efforts; they were
immigrants to the area; they had gone through a progression of job-changes, and were
part of a self-selected kinship and social network. 69 Major post Civil-War industries in
Missouri and the basis of many later fortunes were mining, railroads, meatpacking, and
d Ref. for example the study cited on page .

65
CHAPTER 2:
brewing. Of these, only railroad building was more than an infant industry in 1860, and
the bankers were highly involved with railroads.
The concept of entrepreneur, German ‘Unternehmer’–‘undertaker,’–is not new:
The economist who first recognized and named the entrepreneurial function was
Cantillon, writing in 1755. The idea of the entrepreneur as innovator dates from
Baudeau, writing in the latter half of the eighteenth century. 70 For a long period,
however, the concept was submerged in English, and later American, economic theory.
Beginning with Adam Smith, the capitalist and the entrepreneur were conflated by
English writers. Marx, writing in this tradition, considered entrepreneurs of secondary
importance in the development of capitalism, and had little to say about them. 71 The
significance now ascribed to the entrepreneurial function dates from Joseph Schumpeter’s
The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest,
and the Business Cycle, published in German in 1911 and translated into English in 1934.
Schumpeter drew a sharp distinction between capitalists and entrepreneurs: Capitalists,
including shareholders, are investors, that is, providers of credit. 72 The capitalist is the
producer of the commodity, purchasing power. 73 The role of capitalists is to bankroll
entrepreneurs, and hence underwrite economic and social change. 74 Entrepreneurs are to
be distinguished not only from capitalists but from ordinary heads of businesses. 75 The
latter are primarily concerned with making a living, and follow beaten tracks; by contrast,
entrepreneurs are concerned with making a profit. 76 To do this they take risks, and are
66
CHAPTER 2:
innovators. 77 Schumpeter’s views were consistent with those of Thorstein Veblen and
Alfred Marshall, writing at about the same time. 78 In Schumpeter’s view entrepreneurs
are the engine of innovation in the economy and consequently of changes in social
organization.
Contemporary writers have followed Schumpeter’s lead in defining
entrepreneurship as an innovative, creative activity. J. A. Timmons, in The
Entrepreneurial Mind, describes entrepreneurship as “the ability to create and build
something from practically nothing. It is initiating, doing, achieving, and building an
enterprise or organization, rather than just watching, analyzing or describing one. It is
the knack for sensing an opportunity where others see chaos, contradiction and confusion.
It is the ability to build a ‘founding team’ to complement your own skills and talents. It
is the know-how to find, marshal and control resources (often owned by others) and to
make sure you don’t run out of money when you need it most. Finally, it is the
willingness to take calculated risks, both personal and financial – and then do everything
possible to get the odds in your favor.” 79
Schumpeter defined economic development as the carrying out of ‘new
combinations,’ and this activity as the identifying characteristic of entrepreneurship. 80
Schumpeter identified five types of new combinations: introduction of a new product;
introduction of a new method of production; the opening of a new market; the conquest
of a new source of supply; and the carrying out of new organization within an industry. 81
67
CHAPTER 2:
Later writers concerned solely with the phenomenon of entrepreneurship, such as Paul H.
Wilken, in Entrepreneurship: A Comparative and Historical Study, categorizes
innovation as technological, organizational, material, product, market, financial, and
labor. 82 Specific American innovations in this period were organizational and financial. 83
The Missouri bankers were innovators in opening the Missouri and western
frontiers, in organization, finance, and railroad promotion. The opening of the frontier is
sufficiently familiar not to require further discussion here, except to note that Schumpeter
specifically cites opening a frontier as examples of his third and fourth types of
entrepreneurial innovation, the opening of a new market and the discovery of a new
source of supply. 84 Schumpeter also noted the high degree of chance and speculation in
early entrepreneurship, and this was certainly true on the Missouri frontier. 85 Regarding
organization, the widespread use of the corporate form of ownership was a distinctly
American innovation. The concept dates from Roman times, but until the early 19th
century the use of the corporate form of ownership was restricted. English law restricted
its use after the excesses of the South Seas Bubble of 1720, and the resultant ‘Bubble
Act’ of that year. 86 The adoption of the practice of limited legal liability in U. S. law
between 1800 and 1830 was earlier than in England or France. 87 Before 1830 there was a
distinction in the United States between chartered corporations and joint stock
companies, on the basis of limited liability. After 1830, joint stock companies in the
United States were largely accorded limited liability status as well. 88
68
CHAPTER 2:
Limited-liability corporate ownership greatly increases capital available for
business purposes, by providing a vehicle for summing the small investments of many
small shareholders. 89 Corporate organization is thus also linked to financial innovation.
The Missouri bankers were financial innovators, not only in the financing of their own
enterprises but as managers of a new type of banking in Missouri, and as issuers and
underwriters of a new currency. Schumpeter also considered the relationship between the
banker and the entrepreneur as crucial, because entrepreneurial activity is not financed by
subtraction from the quotidian ‘circular flow’ economy of everyday buying and selling,
but by credit. 90 It is worth pausing to note that the Missouri bankers of this period did
not engage in long-term finance to industry; their banks’ portfolios consisted of short-
term commercial loans maturing in one year or less. e However, the injection of
additional available credit into the economy at any point would tend to make new venture
creation more possible than previously. Missouri banks indirectly financed innovation by
freeing up funds that would otherwise be needed for Schumpeter’s circular economic
flow. 91
The organizational and financial innovations with which the Missouri bankers
were involved led in time to two further developments: First, the creation of business
enterprises much larger than proprietorships and partnerships; and second, the
development of a bureaucratic hierarchy of professional, salaried managers to control
these expanded enterprises. This latter development, besides greatly increasing
e
See Chapter One.
69
CHAPTER 2:
management’s potential span of control, made it possible to avoid the succession problem
that is so frequently fatal to family-owned firms. As officers of the newly-chartered
banks, the bankers of 1861 had one and all made the transition from family firms,
generally considered by economists as a stage in industrialization but in and of itself a
dead end. 92 As far away from the centers of power as they were, the Missouri bankers
participated in all of these developments, and were making their way in a much broader
and more impersonal financial market.
The fourth area of innovation in which many Missouri bankers were active was
railroad promotion. Pioneers, entrepreneurs that is, typically occur in a single branch of
industry at a given time: electronics is the most familiar modern example. In Missouri at
this time it was in banking, railroads, and corporate organization. 93 At an earlier date it
had been slave-based commercial agriculture, but by 1860 the bankers were getting out of
this, even if their clients weren’t. f John J. Anderson, mentioned above, was involved
with no fewer than four different railroads in Missouri. g Schumpeter considered the
promoter to be the purest type of entrepreneur. 94 Other activities can be performed by
hired outsiders, but the creation of the enterprise itself cannot. As railroad promoters, the
Missouri bankers would have been movers in integrating all the developmental trends
discussed above: large-scale operations organized on the corporate model, financed by
broadly-held issues of stocks and bonds, and professionally managed. 95 All these were
f
See page .
g
See page .
70
CHAPTER 2:
American innovations. Despite a century’s head start in industrial transformation, the
British lagged in these respects. 96 Most of the prewar Missouri bankers had been purged
from their positions and scattered by 1865, and were no longer active participants in these
developments. The railroads were decades being built, and their impact on the American
economy longer still in being felt. But the bankers of 1861 had helped make the way.
The current mainstream view in applied economics is that entrepreneurship
springs from certain social and psychological factors. 97 Given the number of high-profile
immigrant entrepreneurs, the concept of marginality has been the subject of a fair amount
of discussion. Paul H. Wilken in Entrepreneurship: A Comparative and Historical Study
argues that entrepreneurs can be either marginal or as mainstream individuals,98
depending on the degree of support and acceptance in the cultural context in which they
operate. Wilken concludes that in the United States, social risks to entrepreneurship were
not great, in contrast to other countries. American entrepreneurship may have been
minimally marginal at first, but then overwhelmingly mainstream. 99 Locationally the
Missouri bankers were definitely marginal, or at least had been, as frontier merchants. 100
They were, however, mainstream in a social sense. 101 In Entrepreneurs in Social
Context, a common theme in Greenfield, et al.’s entrepreneurial case studies is the
importance of relationships of confidence and trust. These relationship networks can
spring from different sources; from birth, church or school affiliations, and village
connections. Some of these connections are weak and easily broken; but at other times
extend over long periods. 102 Given their high degree of intermarriage, common
71
CHAPTER 2:
organizational membership and other interconnectivity, the Missouri bankers themselves
evidently considered their social connections to be of the highest importance. John C.
Cawelti in Apostles of the Self-Made Man corroborates Wilken’s view of American
entrepreneurship as a largely mainstream activity. Cawelti traces the evolution of the
ideology of the self-made man that swept the country in the second quarter of the 19th
century, eclipsing the Jeffersonian idea of a natural aristocracy. 103 At this time, Cawelti
writes, the self-made man was identified with commercial pursuits and business
enterprise. 104 The Missouri bankers, of course, epitomized this ideal.
John B. Miner, in A Psychological Typology of Successful Entrepreneurs,
identifies four different types of entrepreneurial personalities, of which the Missouri
bankers most closely fit the personal-achiever type. 105 Miner describes personal
achievers as classic or traditional entrepreneurs who should take on an entrepreneurial
role, because their talents will not be fully utilized in any other capacity. 106 In New
Venture Creation authors J. A. Timmons, L. E. Smollen and A. L. M. Dingee list
learnable and non-learnable behaviors for successful entrepreneurship, based on years of
consulting work with actual entrepreneurs. 107 The authors’ list of traits include a
veridical awareness and sense of humor; seeking and using feedback; internal locus of
control, tolerance of ambiguity, stress and uncertainty; calculated risk-taking and risk-
sharing; low need for status and power; integrity and reliability; decisiveness, urgency,
and patience; an ability to deal with failure; and team-building. Non-learnable traits are
high energy, health and emotional stability; creativity and innovativeness; high
72
CHAPTER 2:
intelligence; and vision and capacity to inspire. Personality factors that run counter to
entrepreneurial success include feelings of invulnerability; machismo, anti-authority,
impulsiveness, outer-control, perfectionism, a know-it-all attitude, and counter-
dependence. 108 This list of traits closely matches Miner’s, and other characterizations of
entrepreneurs – at least of the personal achiever type – have produced largely similar
results. 109
Entrepreneurs of this type need to couple their high level of energy with a firm
where they can put their energy to work in a satisfying way. The catalyst in this case is
knowledge of the business sufficient to warrant the relationship. The knowledge may be
complex and require a long period of learning, or be relatively simple and demand only
minimal preparation. Either way, there is still some level of knowledge or learning of
this specific business and its industry required. In the case of the Missouri bankers, their
previous occupation as large wholesale merchants and their involvement in financing
those transactions presaged their role as bankers. Their store customers were the same
people who would later be their banking clients; slaveholding planters exporting their
products out of Little Dixie, and smaller storekeepers. 110
Even though many of them lived in small, isolated towns, the bankers were not
bumpkins or provincials. Many had received formal higher education or professional
training. They were internal immigrants and had successfully changed careers several
times. As merchants, many of them had taken annual buying trips to eastern cities to
replenish their stocks, traveling to New York, Philadelphia, New Orleans, and Pittsburgh.
73
CHAPTER 2:
They numbered self-made millionaires, Santa Fe traders, town founders, newspaper
editors, and state legislators. As financiers, in Veblen’s view they comprised the most
modern class of top businessmen. 111 One even finds the occasional intellectual. Robert
Beverly Price, nephew of Sterling Price and cashier of the Exchange Bank of St. Louis
branch at Columbia, was a geologist, engineer, and artist. 112 General Fermin Rozier,
president of the Ste. Genevieve branch of the Bank of the State of Missouri, was the
author of The History of the Early Settlement of the Mississippi Valley. 113 General Bela
Metcalf Hughes of St. Joseph and Edward Augustus Lewis of St. Charles were
distinguished jurists. 114
These, then, were the Missouri bankers of 1861 – wealthy, active, capable, well
connected and respected. They were also in control of the state’s money supply and
commercial credit, and overwhelmingly in favor of southern secession.
74
CHAPTER 2:
CHAPTER NOTES
1
Missouri and Missourians, Volume 3, p. 18.
2
Here Lies Kansas City, pp. 94–5.
3
The Paintings of George Caleb Bingham, A108, p. 52, 158. Illustrated Atlas Map
of Howard County (1876), p. 14, 15, 27.
4
By 1860 branch bank presidents had lived in Missouri an average of 27 years and
cashiers 29 years. 273,500 persons of Missouri’s total population of 1,182,012 in 1860
were born in slaveholding states, almost all of them from the upper South states of
Kentucky, Tennessee, Virginia, and North Carolina. (Source: Fellman, Inside War, p. 6-
7; quoting from the 8th Census of the United States.
5
The average age of branch presidents was 46, and of cashiers 42. 8th Census of
the United States.
6
“Every town and village along that vast stretch of double river-frontage has a best
dwelling, finest dwelling, mansion – the home of its wealthiest and most conspicuous
citizen. It is easy to describe it: large grassy yard, with paling fence painted white -–in
fair repair; brick walk from gate to door; big, square, two-story “frame” house, painted
white and porticoed like a Grecian temple – with this difference, that the imposing fluted
columns and Corinthian capitals were a pathetic sham, being made of white pine, and
painted; iron knocker; brass door-knob–discolored, for lack of polishing.” Twain goes on
to describe the home’s interior in considerable detail. Mark Twain, Life on the
Mississippi, (New York, Harper & Brothers Publishers, 1917), pp. 316 – 322.
7
Mark Twain, Life on the Mississippi (New York, Oxford University Press,
Chapter 29), p. 324.
8
John Beauchamp Jones, (pen name, Luke Shortfield), The Western Merchant
(Philadelphia, 1849), Preface. Quoted in Lewis Atherton, “The Pioneer Merchant,” The
University of Missouri Studies, Volume XIV, Number 2 (April 1, 1939), Columbia,
University of Missouri Press, p. 7.
9
Lewis E. Atherton, “The Pioneer Merchant in Mid-America,” The University of
Missouri Studies XIV, Number 2 (April 1, 1939), Columbia, University of Missouri
Press, p.105.
75
CHAPTER 2:
CHAPTER NOTES
10
According to Atherton, the pioneer merchants of the Midwest, which most of the
bankers had originally been, did not think much of their own occupations. They seldom
kept their records or correspondence, and generally left merchandising as soon as they
were able. Fourteen percent shifted to banking in later life, their second interest after
politics. Source: Atherton, Lewis E., “The Pioneer Merchant in Mid-America,” The
University of Missouri Studies XIV, Number 2 (April 1, 1939), Columbia, University of
Missouri Press, p. 30.
11
Research and calculations by the author.
12
8th Census of the United States.
13
Research and calculations by the author
14
In Cooper County and Boonville, nine households out of approximately 2500 total
reported combined real and personal property in 1860 in excess of $100,000. Median
property holdings per household totaled $5044. This number, however, conceals wide
disparities of wealth in the county; median property value among the sampled households
was only $1800. The top decile of households in the sample declared property valued at
$12,000. Source: 8th Census of the United States, Cooper County, Missouri.
Calculations by the author.
15
16
17
James W. Goodrich, “In the Earnest Pursuit of Wealth: David Waldo in Missouri
and the Southwest, 1820–1878, Missouri Historical Review 66, January, 1972, p. 155–84.
18
Kansas City and Jackson County, Missouri, 1896, pp. 89–95.
19
Columbia Missouri Statesman, 4/28/1854, 3-3.
20
Northrup was Johnson’s predecessor as President of the Kansas City branch of the
Union Bank of St. Louis, and Riddlesbarger was President of the Kansas City branch of
the Mechanics Bank of St. Louis. Missouri the Center State, Volume 4, p. 89.
21
Kansas City and Jackson County, 1896, pp. 89–95.
22
6/2, 6/9, 6/23, 6/30, 7/7/1938.
76
CHAPTER 2:
CHAPTER NOTES
23
1860 Howard County, Missouri Agricultural Census.
24
The Paintings of George Caleb Bingham, A108, p. 52, 158.
25
[Fayette, Missouri] Boon’s Lick Times, 11/15/1845, 3-1.
26
Liberty Tribune, 7/20/1855, 1-2. 1860 U. S. Census for Howard County,
Missouri, Slave Schedules.
27
6/2, 6/9, 6/23, 6/30, 7/7/1938.
28
Liberty Tribune, 12/20/1861, 2-1.
29
Civil War, Confederate envelope (Captain Swinney), Missouri Historical Society,
St. Louis. Noted, ‘n.f., 7/98.’
30
United States Biographical Dictionary, p. 720–1.
31
Walter Bickford Davis and Daniel S. Durrie, An Illustrated History of Missouri,
(St. Louis, A. J. Hall & Co., 1876), p. 546; portrait opposite p. 372. The Paintings of
George Caleb Bingham, A279, p. 205.
32
Obituary, Liberty Tribune, 3/17/82, p. 2; Columbia Missouri Statesman,
3/24/1882. Ref. Bird’s Letter to Gen. Rosecrans demanding Union military protection
and authority to raise a loyal regiment, 3/20/1864 (also signed by E. M. Samuel), Official
Records, Op. Cit., Series I, Volume 34, Part 2, pp. 382–4.
33
34
Walter Bickford Davis and Daniel S. Durrie, An Illustrated History of Missouri
(St. Louis, A. J. Hall & Co., 1876), p. 546; portrait opposite p. 372.
35
36
37
Walter Bickford Davis and Daniel S. Durrie, An Illustrated History of Missouri
(St. Louis: A. J. Hall & Co., 1876), p. 546; portrait opposite p. 372.
77
CHAPTER 2:
CHAPTER NOTES
38
The Paintings of George Caleb Bingham, A279, p. 205.
39
Seventy-five percent of St. Louis bank presidents of the 1860–1862 period were
born in slave states. Source: 1860 U. S. Census for Missouri.
40
Eighty-six percent of the St. Louis bank presidents owned slaves, but many fewer
than their branch counterparts, averaging 2.1 slaves per person. Barnes had the largest
number, seven slaves. Though they were greatly outnumbered, bankers who had been
born in free states were about equally likely to own slaves in Missouri as bankers born in
slave states. For example, the banker Stephen Wentworth of Lexington, born in
Massachusetts, owned ten slaves; John Calvin McCoy, born in Indiana or Ohio and one
of the founders of Kansas City and Westport, owned six. Albe M. Saxton of St. Joseph,
born in Ohio, owned eight slaves. Even the New Jersey-born firebrand Henry Stoddart,
who raised and commanded a Union regiment in largely Confederate Greene County,
owned four slaves in 1860. Regarding patterns of slave ownership, the only distinction
that can be drawn between northerners and southerners in this group is that on average
the northerners owned fewer slaves than the southerners. Even when bankers were pro-
Union, such as David Waldo of Independence and (later Senator) John Brooks Henderson
of Louisiana, they nevertheless fit this pattern.
41
42
43
Robert A. Barnes, William L. Ewing, and Ezekiel B. Kimball married into the
DeMun, Berthold, and Soulard families, respectively.
44
Ref. Primm, Op. Cit., p. 190–1.
45
1860 U. S. census for St. Louis.
46
Only six percent of the presidents and none of the cashiers had been born in cities;
the migration of this group seems to have been from farm to frontier, or frontier to
frontier.
47
1860 U. S. census for St. Louis.
48
Encyclopedia of the History of Missouri, Vol. 1, p. 150. Eighth Census of the
United States.
78
CHAPTER 2:
CHAPTER NOTES
49
James Neal Primm, Lion of the Valley: St. Louis, Missouri (Boulder: Pruett
Publishing Company, 1981), p. 236.
50
Encyclopedia of the History of Missouri, v. 1, p. 43.
51
Encyclopedia of the History of Missouri, v. 1, p. 43.
52
Missouri the Center State, Vol. 2, opp. p. 410; p. 528–30.
53
Official Records, Op. Cit., Series II, Volume 1, p. 554.
54
55
J. Thomas Scharf, History of St. Louis City and County (Philadelphia: Louis H.
Everts & Co., 1883), Vol. 1, p. 742.
56
The Blow family, with the exception of Henry, came from Alabama and were
proslavery Democrats, including Taylor Blow, sometime owner of Dred Scott. Michael
Fellman, Inside War: The Guerrilla Conflict in Missouri During the American Civil War
(New York: Oxford University Press, 1989), p. 302n. Referencing “The Blow Family
and Their Slave Dred Scott,” Bulletin of the Missouri Historical Society, IV (July 1948):
223–31; V (October 1948): 19–33.
57
Liberty Tribune 1/11/1856, 1-7. Also Edwards’ Great West, pp. 219–20.
Portrait, p. 217.
58
“Major General commanding directs that Mr. Brownlee, now a prisoner in charge
of your guard, be released from confinement and be allowed to leave the Arsenal on the
following conditions: 1st, that he resign his commission as president of the board of
police commissioners. 2nd, that he sign a pledge to leave the city to remain in some of
the free states and not to return here without the consent of the military authorities of the
Government.” Major J. McKinstry, U.S. Assistant Provost Marshal, Office of Provost-
Marshall, St. Louis to Lt. Col. S. Burbank, US Army, Commanding Arsenal, dated
8/21/1861. Official Records, Op. Cit., Series II, Volume 1, p. 128.
59
Official Records, Op. Cit., Series II, Volume 2, p. 250. Brownlee was not alone
in being punished by official exile, though he was earlier than most to be thus sentenced.
Primm, in The Lion of the Valley, writes “[b]y the summer of 1862, the army had adopted
the old Spanish custom of banishment. Certain known disloyalists, wives of Confederate
officers, some of whom were spies, and women who too zealously promoted southern
causes were ordered out of the state.” Primm, Op Cit., p. 262.
79
CHAPTER 2:
CHAPTER NOTES
60
St. Louis Missouri Republican, 10/11/1861, 2-3; 10/14/1861, 2-5, 6.
61
About one Missouri family in eight (as opposed to one in two in the lower South)
held slaves. Among slaveholders, the average number of slaves in 1860 was 4.66.
Eighty-five percent of the St. Louis bank presidents in 1860 owned slaves; 2.1 per family
in St. Louis (where almost no one owned slaves). Seventy-nine percent of the branch
presidents owned slaves, on average 10.1 per slaveholder. Somewhat fewer (seventy-five
percent) of the cashiers held slaves than the bank presidents; average slave holdings of
the 1860–1862 cashiers was five. Source: 1860 U. S. Census for Missouri (Slave
Schedules).
62
1850 and 1860 U. S. Censuses for Missouri (Slave Schedules).
63
Schumpeter, p. 89.
64
Wilken, p. 2.
65
Schumpeter, p. 65.
66
Wilken, p. 68.
67
Veblen, p. 16.
68
History of Saline County (1881), p. 571–2. McCandless, History of Missouri,
Volume II: 1820 – 1860, p. 217.
69
The phenomenon of the self-selected kinship and social network is also described
elsewhere in Rothstein’s “The Changing Social Networks and Investment Behavior of a
Slaveholding Elite in the Ante-Bellum South: Some Natchez ‘Nabobs,’ 1800 – 1860.”
In Sidney M.Greenfield, Arnold Strickon and Robert T. Aubey, eds., Entrepreneurs in
Cultural Context.
70
Chell, p. 13.
71
Wilken, p. 5. Marx so underrated the importance of entrepreneurship that the
concept is omitted from standard dictionaries and encyclopedias of Marxist thought. Ref.
for example Hal Draper, The Marx-Engels Cyclopedia (New York: Schocken Books,
1986); Tom Bottomore, ed., A Dictionary of Marxist Thought, (Oxford (UK): Blackwell
Publishers, 1983); James Russel, The Marx-Engels Dictionary (Westport (CT):
Greenwood Press, 1980); and J. Wilczynski, An Encyclopedic Dictionary of Marxism,
Socialism and Communism, (London: Macmillan Press Ltd., 1981).
80
CHAPTER 2:
CHAPTER NOTES
72
Schumpeter (p. 75) acknowledged that this idea was not new to him. Ibid., p. 76.
73
Schumpeter, p. 75.
74
Schumpeter, p. 69.
75
Schumpeter, p. 77.
76
Chell, p. 17.
77
Chell, p. 5.
78
Veblen described the characteristic preoccupation of pre-capitalistic business as
earning a living, rather than making a profit. Veblen, p. 17.
79
J. A. Timmons, The Entrepreneurial Mind (Andover, Massachusetts, Brick House
Publishing, 1989), p. 1. Quoted in Chell, p. 46.
80
Schumpeter, p. 66. Ibid., p. 78.
81
Schumpeter, p. 66.
82
Wilken, p. 86.
83
Slavery, if it can be considered a ‘labor innovation’, was by this time over two
centuries old in the Americas.
84
Schumpeter, p. 134.
85
Veblen, p. 17.
86
Wilken, p. 79.
87
Wilken, p. 204.
88
Wilken, p. 209
89
Wilken, p. 85.
81
CHAPTER 2:
CHAPTER NOTES
90
Schumpeter, p. 195. Ibid., p. 103.
91
Schumpeter, p. 72.
92
Wilken, p. 69.
93
Schumpeter, p. 229.
94
Schumpeter, p. 137.
95
Wilken, p. 202.
96
Wilken, p. 83.
97
Wilken, p. 3.
98
Wilken, p. 10-11.
99
Wilken, p. 216.
100
Wilken, p. 96.
101
Wilken, p. 20-21.
102
Greenfield, p. 16.
103
Cawelti, p. 4. Ibid., p. 46.
104
Cawelti, p. 5.
105
Miner, p. 19.
106
Miner, pp. 22 – 4.
107
J. A.Timmons, L. E. Smollen, and A. L. M. Dingee, New Venture Creation (2nd
edition, Homewood, Illinois: Irwin, 1985). Cited in Chell, p. 47 – 8.
108
Timmons, Op. Cit., quoted in Chell, p. 47 – 49.
82
CHAPTER 2:
CHAPTER NOTES
109
For example, A United States Agency for International Development study
indicated three major categories which distinguish successful, rather than average,
entrepreneurs. First, proactivity; second, achievement orientation; and third, a
commitment to others. Proactivity includes initiative and assertiveness. Achievement
orientation is comprised of the ability to see and act on opportunities, efficiency
orientation, concern for high-quality work, systematic planning and monitoring.
Commitment to others includes a commitment to the work contract, and to business
relationships. Chell, p. 45.
110
Miner, p. 34.
111
Veblen, p. 23.
112
Centennial History of Missouri (1921), Volume 4, p. 978–982. Port., opposite p.
978.
113
History of Southeast Missouri, 1888, p. 610–1.
114
After the war Edward Augustus Hughes served as justice on the Missouri
Supreme Court and as presiding judge of the St. Louis Court of Appeals. Bench and Bar
(1884), p. 18–19, portrait opposite p. 16.
83
CHAPTER 3:
THE BANKS DURING THE WAR
In order to properly understand what happened to the banks, it is necessary to trace
political and military developments in the first year of the war. 1 The bankers played an
important role in the progress of the war through 1861 and 1862. After that events were
largely taken out of their hands, as the state’s economy collapsed and civil society
disintegrated. The resulting disruption of the state’s banking system had severe
consequences for the both the bankers and their clients. What happened in the last half of
early 1861 and early 1862 was the destruction of credit, and the disappearance of hard money
from Missouri. What emerged is a new system with the banks much more dependent on –
and involved with – the federal government than previously.
On November 7, 1860 Abraham Lincoln was elected sixteenth president of the United
States and the first president belonging to the Republican Party, itself not yet ten years old.
Of the four presidential candidates in that election race, Lincoln was one of the two radicals,
the other being the Southern Democrat and secessionist John C. Breckinridge of Kentucky.
The burning issue of the election was not slavery in the existing states, which all four
candidates had sworn not to touch, but the extension of slavery into the territories. Lincoln
was a minority president, elected with less than fifty percent of the popular vote, and without
carrying a single southern state. This fact was not lost on the South. On December 20, 1860
a South Carolina convention called to consider that state’s relations with the federal union
84
CHAPTER 3:
voted unanimously to secede. Between January 9 and February 1, Mississippi, Florida,
Alabama, Georgia, Louisiana, and Texas followed South Carolina. On February 4, delegates
from these seven states met in Montgomery, Alabama to organize the Confederate States of
America.
All over the country business and finance battened down in anticipation of the
impending crisis, though no one yet realized how bad that crisis would be. At the end of
1860 and beginning of 1861, trade and industry ground to a halt. Already by the fall of 1860,
European investors had started divesting themselves of American securities. 2 Loans were
called by the banks, and merchants were refused their usual credit terms. The export of
domestic produce and the re-export of foreign work in process largely ceased. At some of
the southern ports all foreign trade was at a standstill. Existing orders for manufactured
goods were cancelled, and new orders plummeted. Throughout the country, factories were
closed, workmen laid off or put on short hours. The stock markets declined sharply, to
nearly the lowest level reached during the Panic of 1857. Receivers of produce at the
seaboard could realize nothing from sales, as bills of exchange were unsaleable and could not
meet their own maturing paper. Many mercantile houses were not yet recovered from the
Panic of 1857, and went under.
Everywhere there was a drastic decline in bank deposits, as people withdrew their
money. Fearing panic runs on their capital, banks across the country suspended specie
85
CHAPTER 3:
payments, starting with South Carolina almost immediately after the election. On the 20th of
November the Farmers’ Bank of Virginia suspended, and was followed in the next two days
by the other banks in that state. On the 22nd the North Carolina, Baltimore, and Philadelphia
banks suspended. Missouri banks, with the sole exception of the Exchange Bank of St.
Louis, suspended on the 28th, and subsequently the banks of Tennessee. 3 The New York
banks, the largest and most important in the country, partially suspended in December.
Money fled to safe havens wherever it could, to Europe if possible. Gold almost vanished
from the market, disappearing into hoards in wells, gardens, graveyards and woods. The
currency situation simply froze. Exchange rates a shot up across the country. Prices of U.S.
Treasury obligations fell to ten per cent below par, the lowest point since the War of 1812. 4
In the presidential elections, Missourians had voted overwhelmingly for the two
centrist candidates, Stephen A. Douglas and John Bell. Nevertheless, for a variety of
reasons, when the Twenty-First Missouri General Assembly convened at Jefferson City on
December 31, 1860 the Breckinridge Democrats had a higher representation than their
percent of the popular vote in the state. The Breckinridge Democrats represented the largest
single group, with sixty-two members in the House and Senate as compared with forty-six
Douglas Democrats, forty-four Constitutional Unionists, and thirteen Republicans. This
alignment included fourteen holdover Breckinridge senators. John McAfee of Shelby
a
‘Exchange’ in the pre-Civil War sense, the price of exchanging one bank’s currency
86
CHAPTER 3:
County, a pronounced pro-slavery Breckinridge Democrat, was elected Speaker of the House.
Lieutenant-Governor Thomas C. Reynolds, one of the staunchest secessionists in the state,
presided over the Senate.
Five days after the legislature convened, Claiborne
Fox Jackson was inaugurated as governor of Missouri in
Jefferson City. Jackson was a former merchant and
president of the Bank of Missouri branch at Fayette, and
had served as a representative in the State Legislature since
1836. 5 Prior to his election Jackson had been the first –
and thus far the only – Missouri Bank Commissioner, an
Governor Claiborne Fox office created under the Missouri Banking Act of 1857, in
Jackson
the passage of which Jackson himself had been a prime
mover. Jackson had campaigned as a Douglas Democrat on a moderate, conciliatory
platform. The governor’s true affections, however, lay elsewhere. In his inaugural speech,
he called for the legislature to convene a state convention to consider Missouri’s relationship
with the Union, stating “Missouri, then, will in my opinion best consult her own interest, and
the interests of the whole country, by a timely declaration of her determination to stand by
her sister slave-holding States, in whose wrongs she participates, and with whose institutions
for that of another.
87
CHAPTER 3:
and people she sympathizes.” Despite the governor’s intentions and the pro-slavery, pro-
secessionist tenor of the legislature, enough moderates sat in that body to block hasty action.
By the time the legislature adjourned on March 22, its major accomplishment had been to
call the state convention requested by the governor. A special election of delegates was held
on February 18, with voters to choose three delegates from each of the state’s thirty-three
senatorial districts. February 18, as it happened, was the same day the Confederacy
inaugurated Jefferson Davis as its president at Montgomery, Alabama.
When the election was held, the Unionists carried the day strongly. Some 110,000
votes were cast for both Conditional Union and Unconditional Union candidates, while the
secessionists garnered only about 30,000. Not a single Breckinridge Democrat secured a
seat, so far as is known. The Convention gathered briefly in Jefferson City at the Cole
County Courthouse on Friday, February 28, then adjourned to reconvene in better quarters at
the Mercantile Library in St. Louis. On March 19 the Convention, only one vote short of
unanimity, voted that “At present there is no adequate cause to impel Missouri to dissolve
her connections with the Federal Union, but on the contrary she will labor for such an
adjustment of existing troubles as will gain the peace, as well as the rights and equality of all
the states.” On March 22, its work completed, the Convention adjourned, setting the third
Monday in December, 1861, as the date for a second session. At the same time, it
established a committee of seven members, a majority of whom could call the convention
88
CHAPTER 3:
into session at any time should an emergency arise prior to the time scheduled for the next
meeting. 6 Such an emergency, namely the Civil War, did indeed arise, and the Convention
later became the de facto government of the state of Missouri from the time of its second
convening until the War’s end.
All this must have been disappointing to the more ardent spirits among the Missouri’s
secessionists. But events moved quickly. South Carolina troops under P. G. T. Beauregard
opened fire on Fort Sumter on April 12, and the Commandant of the Fort, Colonel Anderson,
surrendered the following day. On the 15th, President Lincoln called for loyal states to
provide 75,000 men to put down the rebellion. Governor Jackson refused to supply
Missouri’s quota of 4,000 men, terming the President’s request “illegal, unconstitutional, and
revolutionary; in its objects inhuman and diabolical.” 7 The same day the Governor met with
leading secessionists in St. Louis, including Major General Daniel M. Frost, commander of
the state militia for the St. Louis district. From this meeting came the plan to seize the U. S.
Army arsenal at St. Louis. To further this object, Jackson sent emissaries to Jefferson Davis,
and to Virginia, which had just seceded, requesting siege guns and mortars. Five days later
Jackson followed this action publicly with a proclamation calling the General Assembly into
special session early in May “to place the State in a proper attitude of defense.” At the same
time he ordered the State Militia to assemble in their respective military districts for six days
89
CHAPTER 3:
of instruction and drill, as provided by law. 8 The following letter, dated April 19, to David
Walker, president of the Arkansas convention, shows Jackson’s thinking at this time:
I have been, from the beginning, in favor of prompt action on the part of the
southern states, but a majority of the people of Missouri, up to the present
time, have differed with me. . . . [M]y present impression is – judging from
the indications hourly occurring – that Mo will be ready for secession in less
than thirty days; and will secede, if Arkansas will only get out of the way and
give her a free passage. . . . Whatever may have been our prior differences, it
seems to me, that the time has come, when all true southern men should be
united as a band of brothers against the common enemy. Public sentiment
here is rapidly leading to this point. A few days more will determine all. 9
Jackson anticipated at most a brief armed struggle to take Missouri out of the Union.
Short-term financing for paying militia troops and purchasing military stores was all that
would be necessary. In early 1861 no one on either side imagined the war would last four
years, cost six hundred thousand military casualties, and destroy an entire region of the
country. Following the election of Abraham Lincoln in November 1860 and the business
slowdown that followed, Missouri’s banks had suspended specie payments. 10 Under the
Banking Act of 1857 such an act was illegal, and technically speaking should have resulted
in the revocation of the banks’ charters. 11 But recognizing the extraordinary nature of the
times, on March 18 the Missouri General Assembly had passed an Act for the Relief of the
Banks of Missouri. 12 In return for a five hundred thousand dollar loan to the state
government, the banks were permitted to retain their charters and to avoid the twenty percent
penalty on their circulating banknotes. 13 In return for the loan the banks were to receive five
90
CHAPTER 3:
hundred thousand dollars in state bonds, which they were to sell. The proceeds from the
bond sale were to fund repayment of the loan. Up until the moment open violence broke out
between the two sides in Missouri, Jackson, Price, and Robert Barnes, president of the parent
branch of the Bank of the State of Missouri in St. Louis, b were scheming on how to move
funds from the banks into the state government’s hands, to finance the secession effort. 14
Meanwhile, both sides were arming and preparing for military conflict. In St. Louis,
Congressman Frank P. Blair was busy organizing and arming the Wide Awakes, Unionist
paramilitary organizations, in preparation for the coming conflict. Captain Nathaniel Lyon of
the U.S. Army, meanwhile, was going around General Harney, the commander of the United
States military forces in Missouri, in writing to
Lincoln, the War Department, and the governors of
neighboring states for arms, ammunition, and the
sending of additional troops. 15
On Monday, May 6 General Daniel M. Frost,
commanding the Missouri State Militia in St. Louis,
established Camp Jackson, named in honor of the
Governor, close to the St. Louis Arsenal. The hills
Former Governor Stirling

Price
b
See Chapter 2.
91
CHAPTER 3:
overlooking the arsenal had long been occupied by federal forces under Lyon, and the arms
and munitions in the arsenal sent to Illinois for safekeeping. Nevertheless, General Frost
went ahead with his plans. On May 8 the siege guns and ammunition that Governor Jackson
had requested from the Confederacy arrived, seized earlier from the federal arsenal at Baton
Rouge. Learning of the guns’ arrival, Lyon decided he must capture Camp Jackson, to thwart
any move by Frost. On May 10, 1861 Lyon surrounded Camp Jackson with his troops, who
were almost entirely German recruits from St. Louis. General Frost saw no alternative to
surrender, and allowed the state militia forces to be placed under arrest. A crowd had
gathered to watch these proceedings, and quickly became unmanageable. As the prisoners
were being marched out rocks and brickbats were thrown at Lyon’s German troops, “drunk
on beer and reeking of sauerkraut,” in the words of one critic. Shots were exchanged and
twenty-eight persons killed, with many more wounded. That night rioters filled the streets of
St. Louis. 16
Toward evening of May 10th Governor Jackson returned to Jefferson City from St.
Louis and reported Lyon’s coup to the State Legislature. The different factions in the
Legislature had been loggerheads since being recalled by Governor Jackson on May 2, and
had accomplished little. Now, stung into action by the events at Camp Jackson, the
Legislature passed a military bill giving the Governor almost absolute power over the state
militia. 17 This force was to include every able-bodied man in Missouri. Other bills were
92
CHAPTER 3:
passed, including finance measures appropriating all of the money in the state treasury,
$82,000,000, for the purchase of war materiel, switching these funds from the state’s schools
and charitable institutions. 18 The legislature further authorized a loan of one million dollars
from Missouri’s banks as well as the issuance of a million dollars in state bonds. 19
Parrish, in Turbulent Partnership: Missouri and the Union, 1861 – 1865, describes
the capture of Camp Jackson as a colossal blunder, driving many Conditional Unionists into
the Confederate camp. Among these Parrish counts many prominent men, including Uriel
Wright of St. Louis, Congressman John B. Clark of Fayette, and former governor Sterling
Price. The timing of Price’s switch of allegiance, if such it was, is of particular interest,
because Price went on to become a Confederate Major General and to supreme command of
Confederate military forces in Missouri. Jackson’s correspondence with Price prior to Camp
Jackson would indicate Price was leaning toward secession from an earlier date. c
There now followed a brief lull, in which both sides continued preparing for war.
Part of the reason for the relative quiet was a struggle over leadership of the Union military
forces in the state. Nathaniel Lyon and Frank Blair urged the removal of General Harney, the
commander of U. S. military forces, for not prosecuting secessionist sentiment vigorously
enough. Conservative elements in the state opposed his removal, fearing that a more
aggressive commander would push the state into open civil war. Lincoln had left the
c
See below, p. .
93
CHAPTER 3:
decision whether or not to retain the General in the hands of Frank Blair, who delivered the
removal order to Harney on May 30. Meanwhile, Jackson appointed former Missouri
governor (and present Missouri Bank Commissioner) Sterling Price major general in
command of the state militia, and eight other brigadier generals – one for each military
district of the state – with orders to enroll the men of their respective districts at once.
On Tuesday, June 11 Blair, Lyon, Jackson and Price met in a final attempt at
reconciliation at the Planters’ House hotel in St. Louis. It is doubtful whether either side ever
intended to yield an inch of its position. For more than four hours the men argued
inconclusively about the relations between state and nation, command of the military forces
in Missouri, and United States authority. Finally, Lyon closed the meeting with this
declaration:
Rather than concede to the State of Missouri the right to demand that my
Government shall not enlist troops within her limits, or bring troops into the
State whenever it pleases, or move its troops at its own will into, out of, or
through the State; rather than concede to the State of Missouri for one single
instant the right to dictate to my Government in any matter however
unimportant, I would see . . . every man, woman and child in the State, dead
and buried. This means war. In one hour one of my officers will call for you
and conduct you out of my lines. 20
Jackson and Price did not wait that long. They immediately proceeded to the railroad
yards, commandeered a locomotive, and headed at full speed to Jefferson City. They stopped
only long enough to fuel the engine and burn the bridges over the Gasconade and Osage
Rivers. Immediately upon their arrival in Jefferson City, Governor Jackson issued a
94
CHAPTER 3:
proclamation to the people of Missouri. He reported the interview and its failure and called
for fifty thousand volunteers to fill the ranks of the State Guard. This proclamation he
quickly dispatched to all parts of the state. At the same time orders went out to the district
commanders. They were to assemble their men immediately at some convenient place and
prepare them for instant service in the field. Missouri State Militia Brigadier General John
B. Clark was ordered to report with his men to Boonville. Here Jackson and Price joined
him with their staffs and a militia company from Jefferson City, in the belief that Boonville
could be defended more easily than the capital. Besides Boonville, the second mustering
point for the rebel forces was to be Lexington, the county seat of Lafayette County, and the
location of the parent branch of the Farmers Bank of Missouri.
Lyon embarked at St. Louis with about two thousand men on Thursday afternoon,
June 14, just as the last members of Missouri’s secessionist government were leaving
Jefferson City. Moving up the Missouri River, he occupied the capital without opposition
the following day. He left three companies there for garrison duty and advanced on
Boonville. Arriving on the morning of June 17, Lyon’s forces attacked the hastily-assembled
Confederate forces, and routed them after a brief struggle. Along with the retreating forces,
Governor Jackson and what was left of Missouri’s 21st General Assembly left central
Missouri, never to return. For the remainder of the war they represented a government in
exile. 21 With the rebel forces in retreat after the battle of Boonville, Little Dixie was now
95
CHAPTER 3:
nominally under the control of the federal military. In fact the area was a powder keg, and
federal authority reached no farther than the range of the guns of the nearest Union militia
unit. Confederate units were forming all over the state where secessionist sentiment was
strong. All pretense of peace was gone, and Missouri was rapidly falling into anarchy. On
July 31, 1861, a month and a half after the battle of Boonville, the state convention originally
called by Governor Jackson to consider secession surprised everybody by deposing Jackson
and Lieutenant Governor Reynolds, and taking control of the government.22 These were acts
of doubtful legality but which no Unionist was about to question. Jackson spent the brief
remainder of his life on the run from federal forces, before dying of tuberculosis and
pneumonia in December 1862. 23
After the Battle of Boonville, Jackson’s original financing plan became impossible.
The legislature had on two separate occasions authorized the appropriation of funds for the
arming of the state militia to preserve Missouri’s sovereignty and defense against outside
invaders, first in March and again in May, following Camp Jackson. However, no
independent state treasury existed; rather, the state’s funds were on deposit in scattered local
banks, and were thus under Union military control. 24 From the secessionist point of view,
this was a violent usurpation of legal authority. It was no longer possible for the
secessionists to obtain funds in the orderly fashion authorized by the legislature and mediated
by the banks. That the state had in fact been invaded and forcibly taken over by outside
96
CHAPTER 3:
troops could scarcely be denied. Federal troops from the neighboring states Kansas, Iowa,
and Illinois were pouring into Missouri. 25 The southern men of 1861 could plausibly argue
and themselves believe that they were within their rights in extricating the state’s money by
any means whatever, and in so doing they were sanctioned by the duly-elected government of
Missouri.
Thus, beginning in late 1861 and continuing through the first year of the War,
propertied pro-southern Missourians wrote huge numbers of promissory notes on their own
personal security to each other, far beyond the drawers’ ability to pay, and discounted the
notes to Missouri’s banks. Pro-Confederate bankers, which meant nearly all of them,
accepted such notes by the thousands in the counties of central and western Missouri. In
effect this was a massive check-kiting scheme which drained capital from the banks, with the
connivance of the bankers themselves. The signatories of the promissory notes are a virtual
Who’s Who of Missouri Confederacy, including Jackson himself, the sons of former
governors Marmaduke and Price, Joseph Orville Shelby, and numerous regimental colonels
and prosperous farmers whose sons went marching off to war.
The promissory notes were the Confederate side of a free-for-all scramble for the
liquid assets of the banks. Where they were able to do so, the federals simply confiscated
whatever coin the banks had on hand and sequestered it. 26 General John C. Fremont, in his
brief tenure as military commander of U. S. forces in Missouri, seized all the specie in the
97
CHAPTER 3:
vaults of the St. Louis office of the State Bank and ordered the branch offices to send what
they had to him. His collections by this method were, however, extremely small. 27 Where
Union military authorities couldn’t seize the banks’ coin, they seized the bankers. John J.
Anderson, President of the parent branch of the Bank of St. Louis, and Paymaster General of
the Confederate State Militia forces, was arrested in May 1861 at Camp Jackson. d John A.
Brownlee, President of the Merchants Bank of St. Louis, was arrested in August and
released, on condition that he leave St. Louis and not return without permission of the
military authorities. e Robert A. Barnes and John W. Wills, Presidents of the parent branches
of the Bank of the State and the Mechanics Bank, were assessed for their Confederate
sympathies. 28 Still, the St. Louis bankers were treated more gently than their Little Dixie
counterparts. Judge Thomas Richardson, President of the Union Bank of Missouri branch at
LaGrange, was murdered while under military arrest. 29 Other bankers, such as Alfred T.
Lacy, President of the Bank of the State of Missouri at Cape Girardeau, simply fled. 30
Exactly when the blow fell depended on a number of things, including how secure Union
military control was in that part of the state. The Farmers Bank of Missouri parent branch in
Lexington, Missouri, one of the most active pro-Confederate banks, remained open under its
original management until November 1862. At that time General Benjamin F. Loan,
d
See Chapter Two.
e
See Chapter Two.
98
CHAPTER 3:
Commander of Missouri’s Northwestern Military District, jailed the President and Cashier of
the Farmer’s Bank and installed new banking officers more to his liking. 31
Events at Osceola and Independence illustrate what was happening all around
Missouri, outside of a few heavily garrisoned towns like St. Louis and Jefferson City. The
county seat of St. Clair County southeast of Kansas City, Osceola is today a village of eight
hundred inhabitants. In 1861 it was smaller still, but was situated on the Osage River, a
navigable branch of the Missouri, and was the site of a branch of the Merchants Bank of St.
Louis. On September 20, 1861, fighting broke out at Oceola as Confederates attempted to
take control of the town. 32 On the 24th Confederates occupied Oceola, following which
General Jim Lane, of Jayhawker fame, at the head of Kansas troops shelled the town and
reduced it to rubble. 33 Following this, apprehension in St. Louis financial markets grew
following a telegraphic dispatch that General Lane captured one hundred thousand dollars
from the bank at Osceola. The Merchant’s Bank in St. Louis denied this, stating that its
funds had been removed. 34 This was only half-true. Two years later, in 1863 the Missouri
State Convention passed a law authorizing the parent bank at St. Louis to wind up the
business of the Osceola bank. The law went on to state that between September 30 and
November 14, 1861 the president and directors of the Osceola branch of the Merchants Bank
did “squander, waste, and misapply the coin and assets of said branch bank, and did permit
divers debtors of said branch bank, to convey to the said branch bank, in pretended
99
CHAPTER 3:
satisfaction of their debts to the same a great quantity of land, amounting to many thousands
of acres of land, at prices greatly exceeding the cash value thereof, the aggregate of which, at
the estimate placed upon them by the said Board of Directors, exceeds the sum of one
hundred and seventy thousand dollars; and whereas, the books of said bank have been
destroyed, the Directors dispersed, and the continuance of the banking business at Osceola
rendered impossible.” 35 In St. Louis John A. Brownlee, president of the parent branch of the
Merchants Bank, was already in deep trouble with the federal military authorities. f On the
10th of October 1861 Brownlee died, possibly by suicide. 36 In late November there was a
renewed buildup of Confederate forces near Osceola, under Generals Price and McCulloch.37
In December Price withdrew from Osceola to winter quarters at Springfield. 38 Thereafter
the town, or what was left of it, remained in Union hands until October 1863. At that time
Confederate General Jo Shelby, raiding through Missouri, stopped at Osceola and burned
it. 39 As to the president and cashier of the bank in Osceola, William L. Vaughn and Judge
John T. McClain, they had by this time disappeared, never to be seen again. 40
The fate of the Independence branch of the Southern Bank of St. Louis was equally
definitive. Its cashier David Waldo, mentioned in the previous chapter, despite being a
native Virginian and owner of eight slaves, was of strongly prounionist sentiments.
Concerned about the safety of the bank’s assets, Waldo disguised himself as a woman, put
f
See page .
100
CHAPTER 3:
the bank’s money in sacks, placed these under his long skirts, left the bank, and drove by
carriage to one of his many farms where he hid the sacks in wells. Waldo was more than a
little eccentric (after the war his family had him confined to the State Lunatic Asylum in
Fulton for a time), but in the event he was right: 41 On August 11, 1862 Confederate forces
under Colonel John T. Hughes and William C. Quantrill attacked Independence, and
besieged the Union military headquarters in the Southern Bank building. Driving the Union
defenders out by firing the adjoining store (the bank building was stone), the Confederates
sacked the town, coming away with some twenty wagons of loot. 42 This was the kind of
thing that went on in Missouri for some four years. It wasn’t Shiloh or Gettysburg, but the
effect on the inhabitants of Osceola and Independence can be imagined.
When the war came, over three-quarters of the presidents and cashiers of Missouri’s
banks were pro-southern. Given the nature of their situation, they were able to act on their
beliefs in more than a personal way; they had the weight of their institutions behind them.
Each branch bank, though nominally part of a larger corporation, was actually only loosely
controlled by the parent bank. Every branch had its own shareholders, elected its own board
of directors, appointed its own officers, and issued its own banknotes. The Exchange Bank
of St. Louis parent branch was staunchly pro-Union (even though its president, the Virginia-
born Junius Brutus Alexander, was not). 43 This did not prevent the officers of the Exchange
101
CHAPTER 3:
Bank branch in Glasgow, Dabney C. Garth and William C. Boon, from being red-hot
Confederates. 44
Late in 1861 Assistant State Bank Commissioner George Penn, acting in lieu of his
chief, Sterling Price, who was now a major general in the Confederate army, classified the
banks of St. Louis as to their political sympathies.45 Pro-Union banks he considered to be the
Bank of the State of Missouri, the Merchants Bank of St. Louis, and the Exchange Bank of
St. Louis. Pro-Confederate were the Bank of St. Louis, the Mechanics Bank of St. Louis, the
Union Bank of St. Louis, and the Southern Bank of St. Louis. Total circulation of the pro-
Union banks was $3,411,000; of the pro-Confederate $3,086,000. 46 Omitted from the
Assistant Commissioner’s calculations were the Farmers Bank of Missouri in Lexington,
which was pro-Confederate, and the Western Bank of Missouri in St. Joseph. Of this latter
bank the parent branch was (probably) Unionist, its branches rather less so. Later events
threw some question on Assistant Commissioner’s conclusions, particularly the classification
of the Bank of the State as Unionist in sympathy. Robert A. Barnes, the President of the
parent bank in St. Louis, was of doubtful loyalty, and the offices of many of the branches –
including Arrow Rock, Cape Girardeau, La Grange, and Fayette, were committed to the
southern cause. The Arrow Rock branch, being Southern in sympathy, buried its coin for a
year and then secretly deposited it in a St. Louis bank where it remained until the close of the
war. 47 Federal forces in Boonville, Ste. Genevieve, Cape Girardeau and Lexington took the
102
CHAPTER 3:
specie from the local banks and carried it away. In the latter location, after the Confederate
victory in September 1861, Sterling Price made a grand public show of returning the bank’s
money. 48 The Exchange Bank branch in Columbia buried its gold under fenceposts until the
end of the war. 49 Other banks secretly conveyed their coin out of the area to safe locations.
Ironically, ‘safe’ generally meant into Union-held territory. Besides the branch of the Bank
of the State of Missouri in Arrow Rock, mentioned above, the branch in Fayette secretly
conveyed its gold coin to Illinois. 50 Times were so unsettled that on August 29 1861 the pro-
Union Exchange Bank of St. Louis announced it would no longer receive money on deposit,
not wishing to be the custodian of money in these times. The St. Louis Missouri Republican
noted at the time that several other banks were refusing to open new accounts. 51
In summary, several things happened to Missouri banks in the latter half of 1861,
after the outbreak of war. First, the pro-southern bankers handed over money in wholesale
lots to their fellow citizens of like politics, receiving promissory notes in return. Second,
whatever money was left disappeared one way or the other, either through military
confiscation, being smuggled out of state, or hidden locally. Third, the federal military
purged bankers who were southern sympathizers. Those who were young enough to do so
often went of and joined Confederate military units; those who remained behind were either
arrested or removed from their positions, sometimes violently. By the end of 1862 the
banks’ capital was gone, and they were no longer active participants in the war or the
103
CHAPTER 3:
Missouri economy. The branch banks were effectively dead. In time, the war’s inflation
eroded profitability from the few performing prewar loans that were still outstanding. The
stock markets certainly judged the banks’ prospects harshly. Bank shares had been sold at a
par value of $100 a share in 1857 when they were issued. By June 1862 bank stock was
selling at between sixty-four dollars and seventy-five dollars a share, when it traded at all. 52
Business in St. Louis suffered as well, even though the city was never seriously
threatened by Confederate troops. St. Louis had been the major hub of commerce connecting
the southern, eastern, and western regions of the country, via the transportation network of
rivers. This commerce was all but halted. In 1861 the Confederate States government had
closed the lower Mississippi and confiscated all assets held by persons residing in the
northern states. 53 In April of that year President Lincoln had proclaimed a blockade against
Confederate ports and forbidden all trade with the rebels. 54 In St. Louis by the winter of
1861-2 the only borrowers in town were military suppliers with contracts with the U. S.
Army. 55 They were good for the money, at least in federal paper of various sorts. But the
Missouri banks remained illiquid, unprofitable, and virtually dormant for the remainder of
the Civil War, for lack of money to lend or demand for it. Owing to the economic collapse in
Missouri occasioned by the War, business activity was at such a low level that normal bank
lending was nearly at a standstill. 56 The Mississippi River was closed to civilian traffic and
not reopened until the capture of Vicksburg on July 4, 1863. This proved a disappointment
104
CHAPTER 3:
to the business community as well. Trade with the South did not resume in anything like its
former volume. 57 The hemp industry in Missouri was particularly destroyed. The market for
hemp had chiefly been in the southern states, as baling for harvested cotton. The war so
effectively killed the hemp business in Kentucky and Missouri that it never revived as a
money crop in either state. 58
Business in Missouri’s had virtually shut down in 1861, and the later progress of the
war did nothing to revive the economy. The published financial statements of the banks
show that they went virtually dormant after 1862. As the war progressed, Missouri
degenerated into a bloody chaos unparalleled in any other state. The Civil War in the west
was not the U. S. government’s chief priority, and the Confederacy’s Trans-Mississippi
Command was the last Confederate army command to surrender. 59 Missouri troops were
drawn off to fight in the east, leaving the defense of the state to local militias. Most men left
to join either army, the few remaining hiding in the woods to avoid being shot or impressed
into service. Horses disappeared from the central districts of the state, taken by foragers.
Agriculture became impossible, and refugees streamed into St. Louis and other safe areas. It
is estimated that during this period one-third of the population left the state. 60 The war in
Missouri remained murderous and lawless up until the very end. Missouri had at one point
three competing state governments, two hostile armies, hundreds of partisan bands on both
sides, and roving gangs of robbers with no politics whatsoever. Modern parallels to the
105
CHAPTER 3:
conflict in Missouri are the civil wars in Lebanon, Bosnia and Somalia. Missouri was one of
the cockpits of the war, with more engagements fought on its soil than any other state after
Virginia and Tennessee. Missouri was the site of no major set-piece battles, such as were
fought in the War’s eastern theater. But the conflict in Missouri was, in its way, as bad as
anything the War produced.
Besides what was happening in Missouri, events on the national scene served to
undercut the Missouri banks. The closure of the lower Mississippi and the severing of trade
with the seceding states sealed the market for Missouri’s main commercial-agricultural
products, tobacco and hemp. The river was eventually reopened, but the results were
disappointing, owing to the widespread destruction of Southern staples. 61 Meanwhile, three
new wartime measures enacted by the U. S. Congress in 1862 – 3 changed the banking
environment forever. The first was the series of Legal Tender acts, which authorized the
issuance of the first national currency in thirty years, backed by the federal government. The
second was the Internal Revenue Act, which provided for federal taxation of a myriad of
things, including state banknotes. 62 The third was the National Banking Act, which
rechartered the banks under federal supervision and provided for a uniform national currency
supplanting state banknotes. 63
Of these three, the Legal Tender acts were in particular born of desperation. At the
time of Lincoln’s inauguration the United States government was virtually out of cash. 64 A
106
CHAPTER 3:
small amount of U. S. treasury notes was in circulation since the Van Buren administration,
following the panic of 1837 when the Treasury was facing default. 65 The government’s first
attempt at a new wartime currency was the ‘demand notes’–so-called because they were to be
redeemable in specie–authorized by Congress in August 1861.66 The law was hastily enacted
and the introduction of the new notes was mishandled, and they met with an indifferent
acceptance from the public. 67 Meanwhile the money situation got worse. On December 30,
1861 the banks of New York, shortly followed by those of Boston and Philadelphia,
suspended specie payments. The banks were being pulled down by the government’s
financing needs. 68 In this crisis atmosphere Congress passed the first Legal Tender Act,
signed by President Lincoln February 25 1862. 69 This law undertook to remove public
resistance to new federal currency by legally requiring its acceptance. The act authorized the
Secretary of the Treasury to issue “on the credit of the United States, one hundred and fifty
millions of dollars of United States notes, not bearing interest, payable to bearer.” It
provided that the notes “shall be receivable in payment of all taxes, internal duties, excises,
debts, and demands of every kind due to the United States, except duties on imports and of
all claims and demands against the United States of every kind whatsoever, except for
interest upon bonds and notes, which shall be paid in coin, and shall also be lawful money
and a legal tender in payment of all debts, public and private, within the United States, except
duties on imports and interest, as aforesaid.” 70 In effect the new law monetized the
107
CHAPTER 3:
government’s IOUs. 71 Acceptance of the new U. S. Treasury “greenbacks” was required as
legal payment of all debts public and private. Of this first issue of legal-tender notes, fifty
million dollars took place of the demand notes that were now to be withdrawn from
circulation. 72 By April 1862 legal tender notes of all denominations made their first
appearance in St. Louis in considerable sums. 73 A second Legal Tender Act was passed on
July 11, 1862, authorizing the issue of $150 million more. 74 Additional issues totaling
another $150 million were authorized and approved by President Lincoln in January and
March 1863. The total number of greenbacks thus authorized and in circulation by mid-1863
was $450 million. 75 There had been an estimated $200 million in state banknotes in
circulation in 1861, and the state banks were all in various degrees of trouble owing to the
war. 76 Under the circumstances the new federal notes were a desirable alternative currency,
and they quickly supplanted the state banknotes. The greenbacks also simplified long-
distance financial transactions. In May, 1862 St. Louis newspapers noted that the cost of
remittances by express in the shape of Treasury notes had dropped to only $1.50 per
thousand dollars, making funds transfer by this method competitive with the purchase of
exchange. 77 The banks’ function as intermediaries in long-distance settlement of commercial
debts was thus immediately impacted, along with other sources of bank revenue and
profitability.
108
CHAPTER 3:
The second revolutionary law from a financial point of view, was the Internal
Revenue Act of 1862, signed into law by President Lincoln on July 1 of that year. This
comprehensive law imposed federal taxes on property, income, and a wide variety of things
including silver plate, carriages, yachts, and billiard tables. 78 The act also levied a 2% tax on
the face amount of state banknotes. 79 Besides undertaking to raise revenue, this measure was
part of the government’s effort to transition the economy to the new federal money, and
rescue of the government’s credit. In 1866, in order to give the national banks a monopoly of
note issue and increase the market for government bonds, Congress increased the tax to 10%
on state bank notes. This wiped out the profit in the issue of state bank notes, and the banks
withdrew them from circulation. Only notes of national banks remained. 80
The third law was the National Banking Act, signed into law by President Lincoln on
February 25, 1863. 81 This law created a new class of banks chartered by the federal
government, under the supervision of the Comptroller of the Currency. Under their federal
charters the new banks undertook to meet certain reserve requirements by leaving a certain
percentage of their capital on deposit at certain designated banks. In return they received U.
S. Treasury bonds and on this security were permitted to issue circulating banknotes as
currency. On June 20, 1863 Jay Cooke’s National Bank of Philadelphia received Charter
Number 1 under the National Banking Act. 82 St. Louis was not far behind; on June 15, in
that city books opened for the sale of stock subscriptions for the newly organizing First
109
CHAPTER 3:
National Bank of St. Louis. 83 Between November 1863 and February 1864 the Missouri
Legislature approved various laws for Missouri banks to wind up and reorganize under U. S.
law as national banks. 84 This act gave the United States a uniform national currency for the
first time, though it was not legal tender. 85 As no U. S. money was convertible into specie at
this time, the greenbacks and the national bank notes remained the currency of the land for
over a decade. Not until January 14, 1875 did the Resumption Act became law, providing
for the retirement of greenbacks until the outstanding total was down to $300 million. The
same law set January 1, 1879 as the date after which greenbacks were to be redeemed in
coin. 86
The introduction of the greenbacks and federal taxation in 1862 was the beginning of
the end for note issue as a source of revenue. But the greenbacks also injected new liquidity
into the financial system at a critical time, without which the banks may have had to close.
The greenbacks were also inflationary, which created an illusory profitability for the banks.
These factors, and the government’s military-procurement contracts, kept Missouri’s banks
on life-support during the war. Even so, two of the original nine banks – the Farmers Bank
of Missouri and the Union Bank of St. Louis, were forced to close at the end of the war,
along with all of their branches. 87 The other banks after 1863 applied for and received
charters as national banks. 88 These reconstituted banks had to divest themselves of their
branches, which were barred to national banks under the new law. Most of the branches had
110
CHAPTER 3:
been closed because of the war anyway, and many did not reopen. Those that did were sold
off to groups of local investors and became private banks, state-chartered banks, and
occasionally national banks.
Nationwide, the number of state banks declined as a result of the war and the
inauguration of the national banking system. In 1863 there had been 1466 incorporated
banks in the northern states, with $239 million in banknotes outstanding. g By 1865 the
number of chartered state banks was down to 349. However, the trend was reversed as the
nature of the banks’ business changed. Note-issue and exchange were gone, but the state
banks now became primarily depository institutions, and played an expanded role in the
check-settlement payment system. With customer deposits, checking services, and local
lending the main pillars of their business, the postwar banks got a new lease on life and
became the recognizable precursors of modern commercial banks. Over the next several the
number of state banks remained equal to that of national banks. 89 Only in l892 were state
banks less numerous than national banks or less important. 90
The bankers, like nearly everybody else in Missouri, ended the war much diminished.
Most of the banks, however, survived, albeit as very different institutions. Considering all
they had been through, survival was remarkable enough. Whether these were the ‘original’
banks, however, is open to question. They resembled the two-hundred-year-old ax, with the
g
Compare to Hammond’s figure of approximately $200 million in state banknotes
111
CHAPTER 3:
handle replaced three times and the blade twice. The St. Louis banks became branch
extensions of the dominant New York-Chicago cash nexus. Their erstwhile branches, cut off
from their parent institutions and each other, were henceforth small-town and country banks,
pure and simple. And they were under new management, had different customers, and did a
different sort of business.
outstanding in 1861, p. .
112
CHAPTER 3:
CHAPTER NOTES
1
Readers interested in a more detailed account of these aspects of the war are referred
to William E Parrish’s History of Missouri, Volume III: 1860 – 1875; and Turbulent
Partnership: Missouri and the Union, 1861–1865, by the same author, from which the
following summary is chiefly drawn.
2
Myers, p. 149.
3
Cable, The Bank of the State of Missouri, p. 274.
4
St. Louis Missouri Republican, 1/1/1861, 2-3.
5
Parrish, History of Missouri, 1860 – 1875, Op. Cit., p. 3.
6
Account taken from Parrish, Turbulent Partnership, pp. 6 – 14.
7
Parrish, Turbulent Partnership, p. 17.
8
9
Jackson to Walker, 19 April 1961, folder 3, Governor’s Papers: Claiborne Fox
Jackson, General Correspondence, 1861. Quoted in Christopher Phillips, Calculated
Confederate: Claiborne Fox Jackson and the Strategy for Secession in Missouri, p. 405.
10
Hubbard and Davids, Banking in Mid-America, p. 92.
11
An Act to Regulate Banks and Banking Institutions and to Create the Offices of Bank
Commissioners, passed by the 19th General Assembly, begun and held at the City of
Jefferson, on Monday, the 29th day of December 1856 (St. Louis, George Knapp & Co.,
Printers and Binders, 1858), Article I, Section 9, p. 5.
12
“An Act for the Relief of the Bank of the State of Missouri, the Merchants Bank, the
Mechanics’ Bank, the Exchange Bank, the Southern Bank, the Bank of St. Louis, the
Farmers’ Bank of Missouri, and the Western Bank of Missouri,” Laws of the State of
Missouri, Passed at the Regular Session of the 21st General Assembly, Begun and Held at the
City of Jefferson, on Monday, December 31, 1860 (Jefferson City, W. G. Cheeney, Public
113
CHAPTER 3:
CHAPTER NOTES
Printer, 1861).
13
14
Both the following letters were among Jackson’s personal papers captured after the
Confederate defeat at Boonville on June 17, 1861, and subsequently published in the St.
Louis Daily Missouri Democrat (6/22/1861, 2-2). Both letters were written May 9, 1861, the
day before the affray at Camp Jackson. The first letter was from Robert Barnes to Governor
Jackson. The second was from Jackson to former governor Sterling Price, whom Jackson
had appointed in January as his own successor to the post of Missouri Bank Commissioner
(Castel, General Sterling Price and the War in the West, p. 7):
St. Louis, May 9, 1861

HON. C. F. JACKSON–Dear Sir: [You may not be aware of
newspaper articles] against the State Bank, for loaning or proposing to loan
the State money for war purposes. These articles have, within the past two
weeks, become menacing towards the State Bank. . . . . An old friend of
mine, and a very estimable man aside from his Black Republican proclivities,
told me [last] Monday . . . in a very serious manner, to take car how I loaned
the Governor money to take the State out of the Union. Now, while I wish to
furnish you with the money, I wish to do it as to be able to show that we have
merely complied with the law, in case we should find it necessary to our
safety to do so, and I therefore think you had better order us at once to deposit
to the credit of the Fund Commissioners our proportion of the half million
[dollars] . . . or what is still better, send [your agent] down to get the money,
and take it to Jefferson [City] for Blair has not only got the Arsenal but . . .
[has] put a garrison in Uhrig’s beer garden . . . on about Twenty-second street
. . . and withal a very high piece of ground. . . . Last night at least a thousand
men passed my house going up Fifth Street to Bechtner’s Varieties . . . and
there they remain, and I presume in a day or two, he will post men in some
commanding point in the northern part of the city, when, having military
possession of the place, he will probably declare martial law, or at least order
the banks not to furnish any money to the State, under pain of being taken
possession of.
I have disobliged the United States government, by refusing to give
them (temporarily) some of our gold for silver, and I don’t want to give them
the excuse for punishing me for it. Get the bond ready as soon as you can.
114
CHAPTER 3:
CHAPTER NOTES
Truly yours, ROBERT A BARNES
Jefferson City, May 9, 1861

HON. STERLING PRICE - Dear Sir: Yours of the 7th inst. is received.
Under the existing state of things it occurred to me that the $500,000 which
the banks have agreed to advance to the State, should be sent at once by them
to this place and put in the Treasury, or if they would prefer it, they might put
it in the branch banks at Brunswick, Glasgow, Fayette, Arrow Rock and
Boonville.
There is no telling how soon Martial Law may be proclaimed in St. Louis,
and in such an event our money would be cut off from us at once. I have
written to [Robert A.] Barnes on the subject, but have not the time to write to
the other Presidents. I beg you, my dear sir, to see them all at once and urge
them to act instanter. Let no one know any thing about it till it is effected.
[orig. italics].
Truly yours C. F. JACKSON
15
Parrish, History of Missouri, Volume III: 1860 to 1875, p. 11.
16
17
An Act to raise Money to Arm the State, Repel Invasion, and Protect the Life and
Property of the People of Missouri, Missouri State Legislature, approved May 11, 1861.
Source: St. Louis Republican, May 21, 1861, 2-2. Missouri State Historical Society
microfilm, Columbia, Missouri.
18
Castel, General Stirling Price and the War in the West, p. 34.
19
Parrish, Turbulent Partnership, p. 24 – 5.
20
21
Parrish, Turbulent Partnership, p. 31–2.
22
115
CHAPTER 3:
CHAPTER NOTES
23
Parrish, History of Missouri, Volume III: 1860 – 1875, p. 48.
24
Castel, General Sterling Price and the War in the West, p. 27.
25
26
27
Cable, The Bank of the State of Missouri, p. 273.
28
Barnes: Letter, James M. Carpenter to Mrs. Octavia Boyle, New York, 11/27/1862;
Mullanphy Family Collection, Missouri Historical Society, St. Louis. Wills: William M.
McPheeters papers, Missouri Historical Society Archives, St. Louis, Missouri.
29
Jefferson City Daily Tribune, 11/28/1893, 4-6.
30
Reminiscences of the Women of Missouri During the 1860s, pp. 238–40. (Compiled
by the United Daughters of the Confederacy).
31
32
Bartels, The Civil War in Missouri Day by Day, p. 15.
33
34
35
Laws of the State of Missouri Passed at the Regular Session of the 22nd General
Assembly, Begun and Held at the City of Jefferson, on Monday, December 29, 1862
(Jefferson City: J. P. Ament, Public Printer, 1863), p. 5.
36
St. Louis Missouri Republican, 10/11/1861, 2-3; 10/14/1861, 2-5, 6.
37
38
116
CHAPTER 3:
CHAPTER NOTES
39
40
Both Vaughn and McClain are absent from 1870 and subsequent Missouri censuses.
County histories and other records contain no mention of their later doings or whereabouts.
41
James W. Goodrich,, “In the Earnest Pursuit of Wealth: David Waldo in Missouri and
the Southwest, 1820–1878, Missouri Historical Review 66, January, 1972, p. 155–84.
42
43
In November, 1861 Alexander was reported at Burkesville, Kentucky as acting for the
rebels in seeing to the butchering of ‘many hogs.’ Official Records of the Union and
Confederate Armies During the War of the Rebellion, Dispatch dated 11/29/1861,
Washington, United States Government Printing Office, Series I, Book 7, p. 459.
44
Garth was a brother-in-law of Sterling Price (Jefferson City People’s Tribune,
6/17/1874, 2-7), owner of 22 slaves (8th Census of the United States for Missouri, Slave
Schedules), and an anti-Benton representative from Randolph County, 8/1854 (Liberty
Tribune, 8/18/1854, 2-2). W. C. Boon was imprisoned at the beginning of the war and
confined to the Alton prison because he refused to take the oath of allegiance. W. C. Boon
biography, United Daughters of the Confederacy Records, Western Manuscripts Collection,
University of Missouri, Columbia, Missouri.
45
St. Louis Triweekly Missouri Republican, 8/1/1861, 2-10.
46
Cable, “The Bank of the State of Missouri,” p. 272. Quoting from W. B. Stevens, St.
Louis the Fourth City (St. Louis: 1909), p.312.
47
Cable, “The Bank of the State of Missouri,” p. 273, quoting Napton, Past and Present
of Saline County, 1881, p. 476.
48
49
Banking in Mid-America, p. 93.
50
Centennial History of Missouri (1921), Volume 3, p. 730–1.
117
CHAPTER 3:
CHAPTER NOTES
51
52
53
Primm, The Lion of the Valley, p. 270.
54
McPherson, Battle Cry of Freedom, p. 313.
55
For instance, the St. Louis Missouri Republican noted in May, 1862 that there was no
lack of money for investment, but there is little employment for it save in government
securities. St. Louis Missouri Republican, 5/4/1862.
56
The St. Louis newspapers throughout this period refer frequently to the collapse of
business. Ref. for example St. Louis Missouri Republican, 9/28/1862, 3-8, a long editorial
on the damage to industry and agriculture occasioned by the shutting-up of the Mississippi
River.
57
Primm, Lion of the Valley, p. 271.
58
O’Flaherty, General Jo Shelby: Undefeated Rebel, p. 51.
59
Fellman, Inside War, p. 231.
60
61
62
Hammond, p. 359.
63
Hammond, p. 355.
64
Hammond, p. 32.
65
Myers, p. 130.
66
Hammond, p. 89. Ibid., p. 87.
118
CHAPTER 3:
CHAPTER NOTES
67
Hammond, p. 95.
68
Hammond, p. 239-40.
69
Hammond, p. 224.
70
Hammond p. 225-6.
71
Hammond, p. 355.
72
Myers, p. 155.
73
74
Hammond, p. 250.
75
Hammond, p. 252.
76
Hammond, p. 89.
77
78
Hammond, p. 280.
79
Myers, p. 163.
80
Myers, p. 163.
81
Hammond, p. 342.
82
Hammond, Sovereignty and an Empty Purse, p. 345.
83
84
Laws of the State of Missouri Passed at the Adjourned Session of the 22nd General
Assembly, Begun and Held at the City of Jefferson, on Tuesday, November 10, 1863
(Jefferson City: W. A. Curry, Public Printer, 1864), p. 9.
119
CHAPTER 3:
CHAPTER NOTES
85
Myers, p. 163.
86
Myers, p. 193.
87
December 18 1863 the Missouri Legislature authorized the Farmers Bank to liquidate
entirely, pending approval of its shareholders. Laws of the State of Missouri Passed at the
Adjourned Session of the 22nd General Assembly, Begun and Held at the City of Jefferson,
on Tuesday, November 10, 1863 (Jefferson City: W. A. Curry, Public Printer, 1864), p. 148.
88
Regarding the Merchants Bank of St. Louis, ref. Hubbard and Davids, Banking in
Mid-America, p. 86. The Southern Bank of St. Louis, reorganized as the Third National
Bank of St. Louis opened for business on January 1, 1864. St. Louis Missouri Republican,
1/19/1864, 4-3. On January 1 1866 he Bank of the State of Missouri, reorganized as the
National Bank of the State of Missouri, opens for business in St. Louis. Cable, “The Bank of
the State of Missouri,” p. 296.
89
Myers, p. 165.
90
Hammond, p. 347.
120
CHAPTER 4:
PROMISSORY NOTES AS ALTERNATIVE FINANCING
Governor Claiborne Fox Jackson had originally expected only a brief armed
struggle, if that, would be necessary to take Missouri out of the Union. To prepare for
this, he would call out the state militia, with the troops to be paid and supplied through a
loan to the state by the banks. The state would repay this loan through a sale of bonds to
the public. After the federal victory at Boonville in June 1861, however, the main
Confederate forces were pushed down into the southern part of the state. U. S. forces
controlled the northern and central portions of Missouri, all the principal towns, the
Missouri River, and the railroads. From the southern point of view, the democratically
elected state government had been overturned by hostile military action, and the state was
under attack. Before being put to flight by federal forces, the state legislature had twice
appropriated money for the state militia, but had no opportunity to pay it out. The state
government did not have an independent treasury; its funds were on deposit in the various
banks throughout Union-controlled Little Dixie. Rather than turning to armed robbery,
Missouri’s southern men now resorted to writing thousands of promissory notes on their
own security, and discounting these notes to the banks. The cumulative effect of these
transactions was to suck money out of the banks, far in excess of the signers’ ability to
repay.
The record of these transactions exists today because they were litigated through
the courts, as the war dragged on. If the South had won and Governor Jackson gone
ahead with his planned sale of state bonds, a means would have been at hand to
120
CHAPTER 4:
compensate the banks and get the note signatories off the hook. As it was, by the latter
part of the war Missouri’s banks, under their newly installed pro-Union management,
litigated in the civil courts for recovery on the defaulted notes. Court records from this
period do not survive in all Missouri counties; a number of courthouses were burned
during the war. In the counties with intact records, thirty-seven counties show this
pattern of multiple promissory-note writing, for a total of roughly 2200 court cases, or
fifty-eight cases per county on average. Some counties had many more cases than others.
Ray, Clay, and Saline Counties, all in northwest Missouri, headed the list with over two
hundred cases each. 1 Map 1, below, shows the frequency distribution by county of suits
brought by the banks for recovery. 2 A striking feature of the promissory note-writing is
its universality throughout Little Dixie, a the main region of southern heritage and
sympathy, and over a very short span of time: three months or so. Since the pattern of
note-writing covered about thirty-five counties, there was coordination of some kind.
The extended network probably consisted of the bankers themselves. The bankers would
have all known each other as a matter of course, and would also have known their
customers. They were also leading men in their communities and pro-southern activists.
The point-man for this wealth-transfer out of the banks and into the hands of the state’s
southern men was probably the branch cashier. The position of bank president, as noted
in Chapter One, does not appear to have been a full-time job. Besides the bankers, other
possible lines of communication existed. Missouri politics had become increasingly
a
Ref. Map, p. .
121
CHAPTER 4:
polarized since the Kansas crisis in the middle 1850s. Missouri’s slaveholders had met
on several occasions to develop plans of action to defend their common interests, such as
the Lexington Proslavery Convention. The Blue Lodge, a clandestine organization to
support slavery in Kansas, was also formed in the years before the war, and would have
afforded a ready-made network for the more committed secessionists to communicate
with each other. 3 Also, many of the Missouri bankers were Masons, and the Masonic
lodges could have provided a ready-made venue for communication.
122
CHAPTER 4:
The use of promissory notes was a wartime adaptation of a common payment
method in use long before the war, occasioned by the shortage of circulating money. A
typical commercial transaction between a storekeeper, two customers, and a banker might
go like this: A and B wish to buy $100 worth of goods from storekeeper C, but will have
no money in hand until their crops are sold in four months’ time. A, B, and C have done
business together for many years, and trust one another. In exchange for the goods, A
and B cosign a promissory note to C for $110 payable in 120 days. The $10 represents
an interest payment to C, for waiting for his money for 120 days. Storekeeper C has his
own cash flow to consider. He discounts (i.e., sells) the note to Banker D for $102.
Banker D holds the note until maturity, and collects $110 from A and B.
This, in its simplest
form, is how Southern
sympathizers raised money
to finance the Confederate
war effort in 1861, with

Promissory note signed June 8, 1861 at Boonville for $525.32
payable to the order of W. O. Jamison in one hundred and
twenty days. Signed by Nathaniel Sutherlin and Walker H. two crucial differences:
Finley, and discounted to William H. Trigg. (See page ).
First, a great many notes
were written in a short period of time, largely back and forth between the groups of the
same individuals in different combinations, far beyond their capacity to repay. Second,
neither the notes’ signatories nor the bankers probably ever expected the notes to be
123
CHAPTER 4:
repaid in their original form. Once the fighting was over, the restored, seceded Missouri
state government could assume the debt, as it had already voted to do. b Through 1861 a
Confederate victory in Missouri still seemed possible. After their poor showing at
Boonville, in August Confederate forces defeated federal troops under Franz Sigel and
Nathaniel Lyon at Wilson’s Creek near Springfield. Lyon died in this battle, depriving
the North of one of its early war heroes. The Battle of Wilson’s Creek and Sterling
Price’s victory at the Battle of Lexington the following month in northwest Missouri, was
the high water mark of Confederate military fortunes in the state.
The writing of promissory notes had started as a trickle in early 1861 as the
bankers, evidently responding to the governor’s call, c made loans to their fellow-citizens
in common cause. The writing of promissory notes peaked in June through September,
depending on the county and how quickly Union military control was established. By the
end of 1861 Missouri Confederates had managed to get hold of a good part of the state’s
money, leaving behind a mountain of paper promises. The amount of money raised was
significant. The Cooper County Circuit Court records, which are the most complete set
of records examined to date, show that about $60,000 was raised in this way. Totals for
some other counties were much higher. A preliminary examination of Pettis County bank
cases indicates that at least $215,000 was raised there. 4 A detailed analysis of three
counties, Cooper, Pettis, and Saline, show that there were eighty-eight separate cases in
Cooper, one hundred sixty-two in Pettis, and two hundred twenty-two in Saline. The
b
See page .
124
CHAPTER 4:
largest such promissory note in Cooper County was for $3360.00 written by Confederate
Colonel Robert McCullock, Missouri State Guard to William H. Trigg, a Boonville
private banker. 5 The smallest note was by Nathaniel Sutherlin and others to Trigg for
$70.36. 6 Most of the notes were for amounts between three hundred and one thousand
dollars, no mean some of money at the time. Each case with an average of three to four
defendants, often many more.
In Cooper County, the notes were written over a three-week period, between
Camp Jackson on May 10 and the Battle of Boonville on June 17, 1861. d In the notes,
the same persons appear over and

COOPER COUNTY, MISSOURI
DEFAULTED PROMISSORY NOTES
over again acting in different
25
NUMBER OF T RANSACT IONS
combinations. Nathaniel
20
15 Sutherlin, for example, is co-

10
maker of two different notes and
5
0
payee of four. The incestuous and
1/61 2/61 3/61 4/61 5/61 6/61 7/61 8/61 9/61 10/61 11/61 12/61
T RANSACT IONS ORIGINAT ING IN 1861 redundant pattern of these
transactions is repeated in county after county. There were eighty-seven suits brought in
Cooper County Circuit Court for recovery on notes written during calendar 1861. All the
above-named persons were defendants in multiple cases, led by Nathaniel Sutherlin in
eighteen. 7 The promissory notes were written back and forth between over a hundred
and fifty different defendants in various combinations as maker, co-maker, payee, and
c
Ref. letter, p. .
125
CHAPTER 4:
assignee. An analysis of courthouse records show that promissory notes of this sort
started to be written as early as January, right after Governor Jackson’s inauguration.
The number of notes written went from a trickle in January to a torrent in May through
August, particularly June at the time of the First Battle of Boonville. By late September
it was largely over, having raised several million dollars for the Confederate war effort in
Missouri.
Most of the notes’ signatories were never household names. 8 They were, in fact,
the bankers’ main prewar customers: countrymen rather than townsmen, large-scale
commercial farmers and slaveholders, and of old English stock, rather than Germans or
other immigrant groups. The notes’ signatories were born, after Missouri,
overwhelmingly in Kentucky, Tennessee, Virginia, and North Carolina. 9 Nathaniel
Sutherlin, for example, farmed seven hundred acres in Blackwater Township in Cooper
County, raising tobacco and hogs. Sutherlin was a 60-year old native of Virginia and
owner of eight slaves, and had been a Cooper County delegate to the 1855 Proslavery
Convention in Lexington, Missouri. 10 In October 1866 Sutherlin was listed as a rejected
voter in Cooper County owing to his support of the rebellion. 11 These people were not
the foot soldiers of the Confederacy but were long-established citizens, in the upper tier
of property ownership in their communities.
In Cooper County, three principal groups were writing notes to each other in early
1861. At least two groups were family-based, and the third was the Sutherlin-Jamison-
d
Ref. Appendix I, Methodology and Sources.
126
CHAPTER 4:
Hay group noted above. 12 Names of persons belonging to other groupings appear less
frequently, but they are often present in other counties. Walker H. Finley, whose name
appears in two of the notes on page , was a forty-two year old cattleman in Saline
County, a Kentuckian, owner of thirteen slaves, and 1160 acres of land. 13 Finley
appeared in five Cooper County cases, always with the same co-defendants; and in six
cases in Saline County where he resided, and in ten more in neighboring Pettis County.
In Cooper County, where the defendants’ biographies have been most thoroughly
researched, most of the defendants either personally served or had kinfolk serving in
specific Confederate military units: the First and Second Missouri Volunteer Infantry,
and the First and Second Missouri Volunteer Cavalry, Missouri State Guard, which
suggests that these units were financed through public subscription by the soldiers’
families. In general, Jo Shelby’s command appears to have been a major beneficiary of
the money raised from the defaulted notes. 14 Besides noncombatant defendants, in Pettis,
Saline, and Cooper Counties eleven Confederate regimental colonels appear as note
signatories. 15
The promissory notes were apparently accepted at the branch banks without the
knowledge of their parent banks in St. Louis. The city had been under uninterrupted
federal military control since the beginning of the conflict, and the banks there were
closely watched. The financial columns of the St. Louis newspapers all through 1861
contain no hint of what was happening, or of impending trouble. The St. Louis Missouri
Republican, the best source of financial news in Missouri at that time, through all of early
127
CHAPTER 4:
1861 reported the lack of demand for credit of any sort; likewise the banks’ reluctance to
lend money except to the most unimpeachable sources, owing to the gathering storms of
war. 16 This was only prudent. Money hides in times of great fear, particularly in
wartime. Borrowing is fine, but lending is not; your debtor might get killed or his
property destroyed. The St. Louis banks were, as far as they knew, playing a very
conservative waiting game. Actually, the banks’ Little Dixie branches were lending
money right and left. After the Battle of Boonville in June and the publication of
Jackson’s secret correspondence, e the St. Louis Daily Missouri Democrat hinted that
more would come out concerning Jackson and Price and their dealings with the banks.17
No additional details were forthcoming, however, and the story died.
That most of the defaulted promissory notes were written for one hundred and
twenty days–four months–indicates how long Missouri Confederates expected the
conflict to last. Instead what happened was that the great bulk of notes written in June
1861 were defaulted in October, when the notes fell due. The parent banks seem to have
been completely blindsided by what happened to them. They were suddenly awash in
bad debt, and facing a liquidity crisis. In October, one St. Louis bank after another
refused to accept either checks or banknotes drawn on other banks, reflecting lack of
confidence in the issuing institutions. The bankers offered no explanation to the public
for their actions. Financial columnists in the newspapers preached calm, asserting over
and over that the banks were solvent. No connection was made, at least publicly, with
e
See Chapter 3.
128
CHAPTER 4:
Jackson’s correspondence published four months earlier. By mid-month, only two state
banks of a total of nine, the Bank of the State of Missouri and the Merchants Bank, were
still receiving checks drawn on each other and each other’s banknotes. The other seven
banks continued to do such business as they could in their own notes. 18 By October 15
the St. Louis Daily Missouri Democrat reported the Union Bank's notes discredited, the
Farmers Bank of Lexington and the Western Bank of St. Joseph broke, and trade in the
City conducted de facto on a specie basis only. 19 By December the banks’
nonperforming debt had shot up to twenty-five percent of total assets, and continued to
climb after that. For the next several months, until the middle of 1862, the banks went
through a period of great turbulence and crisis.
A detailed analysis of the banks’ fortunes is presented in Appendices II and II, but
in summary the sequence of events went like this: At the end of November 1860 banks
suspended specie payments after hearing the news of Lincoln’s election. During the first
quarter of 1861 normal business in Missouri virtually halted. Through the first and
second quarters of 1861, bills of exchange from previous periods still in the banks’ loan
portfolios fell due. As these matured the bills’ signatories paid off, defaulted, or rolled
these transactions over into notes discounted. Owing to this, bills of exchange decreased
as a proportion of banks’ total portfolio, while notes discounted increased. When
repayment was made to the banks, it was in paper banknotes, rather than specie. In the
second and third quarter of 1861 pro-southern Missourians wrote each other large
numbers of promissory notes, and discounted them to the banks. The cash proceeds from
129
CHAPTER 4:
these transactions were used to supply the rebel military units that are forming around the
state. The banks’ holdings of notes discounted skyrocketed, the majority of them due in
three months.
By the end of third quarter and the beginning of fourth quarter 1861, huge
numbers of promissory notes fell due and were defaulted. Suspended debt, which had
already started to move with the maturing of the outstanding bills of exchange, soared to
the unprecedented level of twenty-five percent of total assets. With rapidly increasing
bad debts and rapidly decreasing deposits and cash, the state’s nine banks and their
branches were headed toward a serious liquidity crunch. Some of the banks’ depositors
panicked and withdrew their deposits. The run was limited in scope, because for months
the banks have not paid out specie: withdrawing depositors had to accept payment in
state banknotes of dubious value. The low point of consumer confidence was reached in
December 1861.
By the beginning of fourth quarter 1861, the banks were seriously overexposed to
each other, in terms of clearinghouse accounts and as holders of each other’s notes.
Specie holdings were way down and continuing to drop, as a result of military seizures
and sequestration, promissory notes, and forced government loans. The entire banking
system was dangerously precarious. At the beginning of October, several of the St. Louis
banks refused to accept any more banknotes issued by other Missouri banks. This
coincided with northern reverses on Missouri battlefields and the disappointing
130
CHAPTER 4:
performance of General John Fremont, the ranking federal military commander in the
state.
In response to this crisis, the banks quickly reduced those categories of current
liabilities under their direct control: circulating banknotes and indebtedness to other
banks. There were fewer banknotes around by December 1861, but more and more of
these were winding up in the hands of the bankers themselves. These the bankers
destroyed, or did not re-release into circulation. Since specie was already being hoarded
or taken out of state, the banks’ destruction of their own banknotes created a sudden
shortage of money in Missouri. Nevertheless, at the cost of becoming suddenly much
smaller institutions, the banks remained solvent.
By early 1862, the immediate crisis had passed. The federal government had
established an uneasy dominance in Missouri and new liquidity entered the financial
system in the form of United States Treasury notes, received in payment on federal
military contracts. Banks’ holdings of other banks’ currency declined by two-thirds in
June 1862. This would have been a normal prewar level, but the quantity of state
banknotes in circulation continued to drop in subsequent quarters as they were replaced
by federal greenbacks. Notes on other banks, circulation, and clearinghouse accounts had
by now declined precipitously; depositors and their accounts were held captive by the
banks’ refusal to redeem in specie. The banks had never resumed specie payments since
the suspension in December 1860, so these hostage deposits constituted a kind of floor
below which the banks’ capitalization did not go. Depositors and holders of the currency
131
CHAPTER 4:
of the non-current banks had no recourse, except to exchange their banknotes at a steep
discount for other paper currency, f or else hold on and wait for better times. Better times
eventually came. By May, 1862 notes and checks of all banks except the Farmers Bank
of Missouri and the Union Bank of St. Louis were being accepted at the other banks, and
the currency of the Farmers and the Union were both exchangeable at over 90% of their
par value. 20 For the remainder of the war the greenbacks, government bonds and military
contracts, and wartime inflation constituted an artificial life-support system for the banks.
A more important and longer-lasting effect than the distress of the banks, was that
the defaulted promissory notes began finding their way into court. As Union military
control was gradually tightened over the central part of the state, influential southern men
were purged from positions of power. Among those ousted were the bank officers. The
new, pro-Union bank officers who replaced them took the notes’ signatories to court for
payment. The wheels of justice ground slowly in Civil War Missouri, with regular court
sessions suspended over much of the state. When court sessions were restored, the
sequence of events would happen like this, extending the original example on page
: If, when the note fell due A and B did not pay, the note would be considered ’protested’
(i.e., defaulted, in legal language). Banker D would then take A, B, and Storekeeper C to
court to recover principal and interest, plus costs. Various legal delays would follow:
Not all the defendants could be easily located (many of them were in Confederate
military service), and alias writs would be sent to other jurisdictions. Publication of the
f
Gold had disappeared into hoards.
132
CHAPTER 4:
cause would be ordered by the court. The defendants' attorneys would move to quash; or
file their separate answers to the plaintiff's petition. This pettifoggery might last through
several terms of the court. Finally, all defendants default and judgment is rendered for
the plaintiff for the note’s principal and original interest, interest since the time of default,
and court costs. The county sheriff would then execute the judgment through sale of the
defendants' goods, chattels, and real estate, and report so doing at the following term of
the court. There were so many cases for defaulted notes that they clogged the courts. In
Clay County, where court officials had evidently pre-numbered blank minutes books, a
Volume 7½ had to be inserted in the series to accommodate the promissory note cases.
Suits brought for notes defaulted in 1861 were not heard in some counties until late 1864,
with execution of judgments dragging out until 1866 and 1867. By the last years of the
War there were hundreds of judgments outstanding against the pro-southern Missourians
who had originally signed the promissory notes. Except in a small minority of cases
where the defendants had the money to pay off their obligations to the banks, the court
records document that these judgments were finally satisfied by sheriffs’ auctions of the
defendants’ real property. Surviving newspapers of the day are crammed with notices of
these sales.
133
CHAPTER 4:
Three types of property sales flowed through the circuit court as part of its normal
business: estate administrators’ sales of a deceased person’s property; sales for the
COOPER COUNTY SHERIFFS SALES - ACREAGE

NUMBER OF JUDGMENTS PER YEAR
20
18
16
TOTAL JUDGMENTS
14
12
10
8
6
4
2
0
1858 1859 1860 1861 1862 1863 1864 1865 1866 1867
YEAR OF JUDGMENT
ADMINISTRATOR JUDGMENTS INDIVIDUAL JUDGMENTS BANK JUDGEMENTS
satisfaction of defaulted promissory notes in which the plaintiff was an individual, and
sales for the satisfaction of defaulted promissory notes in which the plaintiff was a bank.
Again using Cooper County as an example, bank sales were almost a non-existent
category prior to the war. But between 1861 and 1865 there were twenty-six such sales,
counting town lots and farm acreage. Of these two, the most important category- from
the standpoint of number of sales and total dollar value – was acreage. The temporal
distribution of sales reflects the disruption of law and order and normal county business
during the war years: Many defaulted promissory notes originally written in Cooper
134
CHAPTER 4:
County in 1861 were adjudicated in the of the Circuit Court Fall Session of that year. Of
these cases, however, only one actual sheriff’s sale of any sort took place in 1861; none
took place in 1862. Even when a plaintiff obtained his judgment in 1861, the attached
real estate was not actually sold until 1864 and 1865. Andrew Jackson Barnes, Cooper
County Sheriff from January 6, 1863 to September 5, 1864 conducted twenty-six auctions
of property for defaulted promissory notes, thirteen of these for banks. 21 Barnes’
successor, William J. Woolery, Sheriff from January 11, 1865 to May 2, 1865 22–less than
COOPER COUNTY SHERIFFS SALES - ACREAGE four months–conducted

BANK JUDGMENTS - TOTAL ACREAGE SOLD
fourteen such auctions, ten
12000
TOTAL ACREAGE
10000
8000 of them for banks. 23 The
6000
4000
2000 Cooper County Sheriff must
0
1858 1859 1860 1861 1862 1863 1864 1865 1866 1867 have been highly unpopular
YEAR OF SALE
in those years. It took some
time, but ultimately in Cooper County alone, almost fourteen thousand acres went under
the sheriff’s hammer as a direct result of the defaulted promissory notes of 1861. Total
acreage in Cooper County at that time was one hundred sixteen thousand acres improved
land, and one hundred seventy-seven thousand acres unimproved, so the auctioned
acreage comprised about five percent of the total. 24 The auctioned property was not
made up of fifty-acre plots, however; rather, it was the large farms of the elite, such as
Nathaniel Sutherlin’s seven hundred-acre spread. This was at a time two hundred acres
was accounted a large farm.
135
CHAPTER 4:
This happened all over Little Dixie. This has hitherto been an overlooked aspect
of the war in Missouri, owing to considerable obstacles in researching the source
material. g The banks came to own thousands of acres of real estate, awarded in court
COOPER COUNTY SHERIFFS SALES - ACREAGE judgments for the thousands

BANK JUDGMENTS - SALES PER YEAR
NUMBER OF SALES
20
of defaulted promissory notes
16
12 written in 1861. Under the
8
4
0 1857 Missouri Banking Act,
1858 1859 1860 1861 1862 1863 1864 1865 1866 1867
YEAR OF JUDGMENT the banks were only allowed
to own sufficient real estate
to accommodate the needs of the bank itself. 25 All other real estate could be held only
upon judgment and decrees in favor of the bank, in order to secure debt, and was to be
disposed of as soon as practicable. 26 The purpose of this provision was to prevent land
speculation by the banks, which had brought grief to many banks in the south and west
before the Civil War. As a consequence, Missouri banks’ real estate holdings went from
virtually zero in 1860 to a substantial percentage of their assets as the war progressed. h
This tidal wave of litigation occurred at the same time as major organizational
changes at the banks themselves. Two of Missouri’s nine banks of issue had to close at
the end of the war: The Union Bank and its six branches liquidated in 1866; the Farmers
Bank and its two branches later the same year. The remaining seven banks applied for
and received charters as national banks under the terms of the National Banking Act of
g
Ref. Appendix I, Methodology and Sources.
136
CHAPTER 4:
1863. To do this the law required the banks to divest themselves of their branches.
About half the branches were accordingly closed; this was often a paper transaction only,
since most branches were already closed by the war. The surviving branches, now
independent, subsequently organized as either national banks themselves, or, more often,
as state banks. These successor institutions remained small and local, far from the
financial mainstream. The original banks seem to have kept their real estate and non-
performing debt on their books until they reorganized. At the time of the breakup these
dubious assets were handed over to the branch banks’ new owners to do with as they
would. No record of the branch banks’ divestiture survives. But given that the war was
still on and Missouri real estate was next to worthless, this transfer was probably made at
fire-sale prices. Thus the parent banks were finally forced to acknowledge a substantial
loss in their financial statements in 1864 – 5. This loss had in fact occurred earlier, but
been concealed in the books.
Through the vehicle of the promissory notes, money was quickly moved out of
the banks and into the hands of large numbers of central-Missouri farmers–all of old
English stock, many of them slave holders, with ties of blood to the seceding states of the
Upper South. Then the money moved again–certainly the men who had briefly held it
didn’t keep it. By the end of the War they had nothing left but their farms, and that is
how their debts were ultimately repaid. One way to view this affair is as the funding of
the Confederate war debt–at least in Missouri. By War’s end these mass foreclosures and
h
Ref. Appendices II and III.
137
CHAPTER 4:
sales had disproportionately affected the upper decile of property owners in Little Dixie,
the heads of households that constituted Missouri’s antebellum slaveholding elite. These
people, formerly wealthy pro-southern Missourians, were left with even less to return
home to than ex-Confederates from the seceding states. All had lost life, limb, slaves and
other personal property, and been disfranchised; the Missourians had lost their homes as
well. 27
138
CHAPTER 4:
CHAPTER NOTES
1
Numbers of promissory-note cases per county are approximate except for Cooper,
Pettis, and Saline Counties, which court records have been researched extensively and in-
depth. Quality of the indexing done for the court cases in this period varies widely by
county. Multiple promissory notes signed by overlapping groups of individuals is the
rule with these cases. Several separate suits brought by the same bank as plaintiff are
sometimes indexed as a single case; alternatively, several court hearings in a single case
might receive more than one index reference in the Minute Books. Ref. Appendix I,
Methodology and Sources.
2
Source: Missouri Circuit Court Minute Books, 1861-1865 microfilm, Missouri
State Archives, Jefferson City, Missouri.
3
McCandless, History of Missouri, Volume II: 1820 – 1860, p. 272 – 3. No
written records of the Blue Lodge have ever been found. Given that it was a
conspiratorial organization, this is not surprising. However, there are several personal
accounts of individuals who came in contact with the group or its members. See for
example the story of General George Rappen Smith, in History of Pettis County, p. 424.
O’Flaherty writes that during Shelby’s Missouri campaign of 1864 the Knights of the
Golden Circle, “had come into [Shelby’s] camp with mysterious books, innumerable
signs, grips, signals, passwords and incantations, to aid the cause; General Sterling Price,
riding about in a buggy because of his great bulk had placed great reliance on them,
though they had never enabled a Confederate soldier to take or hold a foot of ground.”
O’Flaherty, General Jo Shelby: Undefeated Rebel, p. 241-2, quoting Edwards, Shelby
and His Men.
4
This is a minimum figure because it includes cases in which a state-chartered
bank was the plaintiff, and only one private banker, William K. Trigg of Boonville.
Other private bankers were involved, but the extent of their contribution remains to be
measured.
5
William H. Trigg vs. Joseph R. McCullock, Robert McCullock, Robert M.
Williams; Cooper County Circuit Court Records, Case #75, March, 1863 term, Boonville,
Missouri [CO633075]. McCullock served in the war as Colonel, 2nd Missouri Cavalry,
Brown’s Regiment, Parson’s Brigade, Missouri State Guard. He enlisted in Jefferson
City or in Springfield, 5/12/61, and was elected Captain of Company A in Brown’s
Regiment, Missouri Cavalry, 6th (Parson’s) Division. Elected Captain, Company A, 2nd
Regiment Missouri Cavalry 1/11/62. Promoted to Major 1/1/63. Promoted to Lieutenant
Colonel 8/14/63, in command of the regiment. Participated in most of the engagements
139
CHAPTER 4:
CHAPTER NOTES
with the regiment. Served in Tennessee, Mississippi, Alabama, and Florida. (Sources:
Liberty Advance Adjutant General’s Office. Ref. also Confederate Military History,
Volume 9, pp. 344-6). McCullock is elsewhere described as Lieutenant Colonel, 1st
Missouri Cavalry, Brown’s Regiment. McCullock was elected after Colonel William H.
Brown killed in action at Boonville September 12, 1861 (History of Cole, Moniteau, etc.
Counties, 1889, p. 256).
6
William H. Trigg vs. George W. Wallace, Thomas S. Williams, Nathaniel
Sutherlin; Cooper County Circuit Court Records, Case #75, March, 1863 term, Boonville,
Missouri [CO633083].
7
Of the rest, Nathaniel Allison was defendant in seven cases, Walker H. Finley in
five, James H. Hay and William M. Rucker in eight, and George W. Wallace in six.
8
There are exceptions. In Chariton County Edwin Price, former Governor Sterling
Price’s brother and commander of the Missouri State Guard, is a co-maker of several
notes; in Lafayette County, one Joseph Orville Shelby cosigned six notes.
9
Of 150 defendants in Cooper County bank cases whose state of origin could be
identified, 134 were born in Missouri, Kentucky, Tennessee, Virginia, or North Carolina.
97 of 150–65%–were born in Kentucky, Tennessee, or Virginia. Sources: Cooper
County Circuit Court minute books 8 and 9, Circuit Clerk’s Office, Boonville, Missouri;
1860 US Census for Cooper County, Missouri.
10
1860 U. S. Census for Cooper County, Missouri. History of Howard and Cooper
Counties, p. 751.
11
Newspaper article listing accepted and rejected voters in Cooper county, entitled
“To the Conservative Men of Cooper County,” Central Missouri Advertiser, Boonville,
Missouri, 10/1866. Located in the William H. Trigg papers, Volume 5, Western
Manuscripts Collection, University of Missouri, Columbia, Missouri.
12
One was the Harris family, Thomas M., James Y., James J., and James J. Jr. The
second was the Hughes family, James A., Samuel, and Thomas J. A closer look at the
third group will likely reveal marriage and kinship ties here as well.
13
1860 U. S. Census for Saline County, Missouri.
14
In a war where many military units were known as ‘Bledsoe’s Battery,’ ‘Elliott’s
command,’ and so forth, a great many of the commanders so named officered units of
140
CHAPTER 4:
CHAPTER NOTES
Shelby’s Iron Brigade: Hiram Bledsoe, Benjamin Elliott, George P. Gordon, Ebenezer
Magoffin, David Shanks. Ref. O’Flaherty, General Jo Shelby–Undefeated Rebel.
15
Hugh Chrisman, George J. Fackler, Vincent Marmaduke and William Brown in
Saline County; Ebenezer Magoffin, Thomas F. Houston, Jonathan Graves, and James R.
Major in Pettis County; Robert McCulloch, Charles B. Alexander, and Horace H. Brand
in Cooper County. These persons were first identified as defendants in the promissory-
note cases; then their service records were traced to Confederate muster rosters, county
histories, and personal reminiscences at the Missouri State Historical Society, the
Missouri State Archives, and the UDC.
16
For example, “The movements in the money market were, to day, as usual,
lifeless. To add to the palsying effect of the restrictions which fetter our commerce, is a
civil war in our midst, which has been kindled at different points in the State. . . As may
be imagined, their [sic] tendency is to engross the minds of all, to the neglect of ordinary
industry and business pursuits.” Source: St. Louis Missouri Republican, July 18, 1861,
3-8. Missouri State Historical Society microfilm, Columbia, Missouri.
17
St. Louis Daily Missouri Democrat, 6/25/1861, 1-1.
18
19
St. Louis Daily Missouri Democrat, 10/15/1861, 3-8.
20
St. Louis Missouri Republican, 5/12/1862, 3-8. Ibid., 5/7/1862, 3-8.
21
Source: History of Howard and Cooper Counties, Missouri, Op. Cit., p. 831.
22
Ibid.
23
Source: Cooper County, Missouri Circuit Court Records; Cooper County Deed
Books, Boonville, Missouri.
24
C. G. Kennedy, Agriculture of the United States in 1860, Compiled from the
Original Returns of the 8th Census Under the Direction of the Secretary of the Interior,
(Washington, D. C.: Government Printing Office, 1864), p. 88.
25
An Act to Regulate Banks and Banking Institutions and to Create the Offices of
Bank Commissioners, Op. Cit., Section 26.
141
CHAPTER 4:
CHAPTER NOTES
26
Bank Commissioners, Op. Cit., p. 10.
27
This event has hitherto been totally overlooked by historians. Ref. for example
Hubbard and Davids, Banking in Mid-America.
142
CHAPTER 5:
THE NEW REGIME
A common outcome of war is a popular mythology – or demonology – of profiteers:
Greedy middlemen getting rich on military contracts, while squeezing the common people.
Whoever the profiteers may have been in wartime Missouri, they were not the bankers. By
1865 and 1866 business had been through so many changes that the prewar financial
establishment in Missouri was completely overturned. The bankers saw their assets shrink,
their own ranks decimated, and their business changed almost beyond recognition.
Wars tend to accelerate social changes that are occurring anyway, and the Civil War
was no exception. Already by 1853 the completion of the railroad connection between New
York and Chicago presaged the eventual eclipse of St. Louis, even as that city was in the
middle of its most explosive period of commercial growth. 1 Shipping goods west via rail
was faster, cheaper, and more reliable than the riverine transportation network that had been
the foundation of St. Louis’ early growth and prosperity. 2 But rather than a long, losing
competition, the war was a killing disaster for St. Louis business. When the Confederate
government blockaded the lower Mississippi in 1861 the city lost its southern trade and its
outlet to eastern and foreign markets. The disruption of the war and various federal
restrictions against its commerce shifted most of the city’s trade with the upper Mississippi
valley to Chicago. After the Union armies secured the river in 1863 St. Louis’s trade
approached its prewar volume, but it was an artificial prosperity, largely buoyed by military
contracts. When army purchases dropped precipitately in 1865, business slowed again, and
143
CHAPTER 5:
THE NEW REGIME
trade volume at St. Louis dropped well below prewar levels. 3 The War cost Little Dixie, as
well. The abolition of slavery destroyed the economic basis of commercial hemp and
tobacco culture, and neither industry ever recovered in the state. The structure of the market
itself – the interdependent, triangular exchange of manufactured goods in the east, foodstuffs
and agricultural materials in Missouri, and cotton exports in the south was destroyed. The
western extension of the railroad wiped out the advantage Missouri farmers had enjoyed as
suppliers to the western settlers. 4 Little Dixie became a backwater, never again achieving its
prewar economic importance.
The passage of the National Banking Act in 1863 had completely changed the rules of
banking, and the banks were more bound up with the federal government than ever before.
Even in the absence of a federal presence, banking centralization was an ever-increasing fact
of life. New York was already the center of physical distribution and merchandising, and the
growth of financial services to support this trade was a logical concomitant. 5 The successful
laying of the transatlantic cable between New York and London in 1866 only confirmed New
York’s financial hegemony. 6 This dominance extended beyond financing and the extension
of credit, to the dissemination of information and price setting. In June 1862 the St. Louis
newspapers make their first reference to the price of gold being set by the New York
markets; after that it was routine. 7 By 1863, two-thirds of the articles on financial topics
republished in the St. Louis Missouri Republican came from the New York papers, compared
to one-third before the war. 8
144
CHAPTER 5:
THE NEW REGIME
Between 1860 and 1865 there was a nominal fifty percent turnover in Missouri bank
presidents and cashiers. I say ‘nominal’ because many branches closed; among those that
stayed open, turnover in bank officers was over eighty percent. Most of this change occurred
in the latter years of the War, as the pro-Confederate bankers of 1860–1862 paid for their
political convictions. The newcomers were solid Union men, frequently Northerners. The
new men were by no means hollow suits – they were substantial men in their own right.
Major Henry Smith Turner, after 1863 the president of the Union Bank of St. Louis, was a
graduate of West Point and of the Cavalry School of Saumur, France. Before the war he had
held a number of distinguished posts in government and finance, including Assistant United
States Treasurer in St. Louis and representative in the Missouri legislature.9 Oliver Garrison,
a native of New York City, and in 1863 and 1864 the president of the Mechanics Bank of St.
Louis branch in Warsaw, had previously been president of the Eagle Iron Foundry in St.
Louis, and made a fortune from this and from speculation in real estate. 10 This first
generation of new bankers was not as integrated with the society as a whole or their own
group as their predecessors had been. They owned less property, fewer slaves, and their
families were less intermarried. It was the new men, rather than the southern men they
replaced, who founded commercial dynasties in St. Louis lasting into the twentieth century.
The new men were citizens of a different world, the New York-Chicago capital nexus, and
they wholeheartedly embraced the state’s increasing integration with the North. Their sons
145
CHAPTER 5:
THE NEW REGIME
and daughters went on to Harvard, Yale, Bryn Mawr and like schools; later becoming
governors, mayors, ambassadors, or the wives of these people.
Of the handful of prewar bankers who had been pro-Union, many went on to do well
after the war. Milton Tootle, president of the Western Bank parent branch in St. Joseph,
became a great power in that city and the founder of a family fortune. He was the main
benefactor of the St. Joseph Opera House, which is named for him.11 Robert E. Carr, in 1860
– 1 the Cashier of the Exchange Bank of St. Louis parent branch, after the war was president
of three different railroads. 12 Some bankers, whose politics had been of the weather-vane
variety during the war, made their way well enough afterward. General Bela Metcalf
Hughes, formerly Cashier of the Western Bank in St. Joseph became a prominent attorney of
the Denver bar. 13 James Britton, appointed president of the Southern Bank parent branch in
St. Louis in 1864 and president of its successor, the 3rd National Bank of St. Louis, was
elected mayor of St. Louis on a Democratic ticket in 1875 – 6. 14
Pro-southern ex-bankers who remained in Missouri were generally excluded from the
great postwar carve-up of the economic pie. An exception was William E. Burr, who was in
1861 cashier of the Boonville branch of the Bank of St. Louis. Burr was a committed
southern man, and in September 1861 had been taken hostage by the Home Guard troops in
Boonville to forestall a Confederate attack. 15 But by war’s end Burr was president of Bank’s
parent branch and its successor, the St. Louis National Bank, and later of the St. Louis
Clearing House Association. 16 Burr has left virtually no trace of himself behind, except a
146
CHAPTER 5:
THE NEW REGIME
few bare facts on the public record. This was almost certainly deliberate on his part. He is
noted, intriguingly, in one of the few histories of St. Louis that mentions him as having
“financed many of the operations of the Confederate Army.” 17 Edward Augustus Lewis, in
1861 president of the St. Charles branch of the Southern Bank of St. Louis and a presidential
elector for John C. Breckenridge, was appointed in 1874 to the Missouri Supreme Court and
in 1876 became presiding judge of the St. Louis Court of Appeals. 18 At the other extreme,
only a very few wound up in truly dire straits, such as Jesse Riddlesbarger, former president
of the Mechanics Bank of St. Louis branch at Kansas City, who died at the age of eighty-four
on the Howard County Poor Farm. 19
The war and its aftermath scattered and marginalized most of the displaced pro-
southern bankers. Both in St. Louis and the branches, the bank officers of the 1860–1862
period were disproportionately absent from the 1870 census, compared to other persons of
similar age, wealth, and occupation. 20 Their names also tend to be missing from county
histories, the Surname Index at the Missouri State Historical Society, and other documents of
the historical record. Where they are mentioned, their sectional politics is usually passed
over. A surprising number of them wound up in that citadel of Yankeedom, New York.
John J. Anderson, former president of the Bank of St. Louis parent branch, Hiram Northrup,
formerly president of the Union Bank of Missouri branch at Kansas City, and Robert W.
Donnell, formerly president of the Bank of the State of Missouri branch at St. Joseph, all
migrated to New York. 21 There is some indication that, thus transplanted, the old kinship
147
CHAPTER 5:
THE NEW REGIME
network reasserted itself. 22 Few of the displaced pro-southern bankers were able to reach
new positions of wealth and influence, however. Most lived out the rest of their lives in
modest obscurity, often far from their homes of 1861.
It is worth considering why the pro-Confederate majority did not go on to flourish,
after the war. They were experienced, intelligent, and well-educated; all of them had made at
least one fortune already, in a society that had little wealth to spare. The most obvious thing
they lacked after the war which they had before it, was their kinship, social and economic
nexus. Missouri bankers in 1860 were a highly cohesive group, powerful men to be
reckoned with in their communities, and personally known to each other. In addition to their
economic relationship, the bankers were interconnected by common heritage and
background, social class, kinship and marriage. In short, they were the community’s ‘best
men,’ charter members of the networks of mutual trust essential to the conduct of business.
The war changed all this. The bankers not only lost their money; they were no longer the
best men. The new best men were loyal Unionists, Northerners, and Republicans.
Everything the bankers had been and stood for was now discredited. Furthermore, owing to
their postwar geographic diaspora, they were largely disconnected from each other.
Entrepreneurs, once they get started, have a tendency to swarm. 23 The most striking
modern examples of this are Silicon Valley, and the Cambridge-Boston area around MIT.
Within the past few years similar enterprise zones have developed in Seattle, around the
University of Texas in Austin, and elsewhere. What seems to make these areas so dynamic is
148
CHAPTER 5:
THE NEW REGIME
that a certain critical mass of entrepreneurs is reached. Once this happens, the economy
becomes habituated to change and obstacles to further innovation become smaller. 24
Economic development becomes self-sustaining when an ever-increasing stream of
purchasing power flows into the money market. 25 Entrepreneurship seems to be like other
types of human creativity: discontinuous and episodic rather than a lifelong state.26 After an
entrepreneur has introduced an innovation, it becomes part of the common stock of
knowledge, creating a new equilibrium situation. 27 At this point the entrepreneur’s
importance decreases and he becomes part of the establishment, even a conservative force.
Banking itself was still growing rapidly in Missouri in 1861; as a force for change it appears
to have been by no means spent, in the four years since its establishment by the Act of
1857. 28 In the same period, the railroads were the leading edge of industrial development.
Given their key roles in both of these areas, Missouri bankers appear to have still been in the
entrepreneurial phases of their business careers, when they were interrupted by the war.
I am not suggesting that antebellum Missouri was on its way to becoming a
nineteenth-century Silicon Valley: Silicon Rope-Walk, or Silicon Tobacco-Barn. I am
saying that the bankers exhibited the typical swarming behavior of entrepreneurs, and that
Little Dixie was a growth point for the new economy, which developed with such force after
the Civil War. For a brief period these people occupied a forward position in the economic
development of the country. So did Missouri, as the westernmost state for some twenty
years, and the jumping-off point for the frontier. A common nineteenth century expression
149
CHAPTER 5:
THE NEW REGIME
was, “Missouri is Mother to the West.” It is impossible to estimate the extent to which
Missouri bankers would have further contributed to economic and social innovation of their
region, if they had not been interrupted by the war. Men of all times and places end to view
their worlds as inevitable and fixed, but to contemporaries the Civil War seemed like a very
close shave. Certainly the South thought it could win. Had it done so, the Missouri bankers
would have been among the leading citizens of the state. The business model the bankers
would have developed might well have been different from the ultimately victorious New
York-Chicago model. As highly influential men in their communities, the bankers molded
their world to suit themselves, and their world-view was different from our own: pro-
slavery, Herrenvolk democratic, secessionist, territorially expansionist, and kinship-based.
One cannot help but wonder why the majority of these hardheaded, practical and
foresightful men would back the losing side. The bankers did not simply mirror the
mainstream opinions of their communities. Every St. Louis banker whose politics could be
positively identified was pro-Confederate, even though the city was strongly pro-Union. 29
On the other hand, Clay County, Missouri was one of the principal Confederate strongholds
of the state. This did not deter the Liberty bankers Edward M. Samuel and Greenup Bird
from being outspoken, public Union men. 30 It has been pointed out that in the election of
1860 the secessionist candidate John C. Breckenridge garnered most of his vote from poor
white areas of the state, with the implication that secession was a poor-white political
ideology. 31 But many of the bankers were Breckenridge Democrats.32 Regarding protection
150
CHAPTER 5:
THE NEW REGIME
of private property, all of the candidates–Lincoln included–had pledged non-interference
with the institution of slavery in the existing slave states. The safest course for the
preservation of property would have been to vote as most Missourians did–for the two
centrist candidates, John Bell and Stephen A. Douglas. But there is a danger in assuming
how obvious the outcome of the Civil War would have been in 1861, and Missouri bankers
were already a minority who exercised leadership over the majority: Entrepreneurship must
be independent of public opinion and social convention to some extent, owing to its
innovative character. 33
There is probably a psychological dimension to why the politics of these hardheaded,
successful businessmen would have contradicted what in retrospect was their clear economic
self-interest. The Missouri bankers of 1861 were not only financial capitalists and successful
entrepreneurs, but also self-made men. Missouri had only become a state in 1821, and as old
settlers these men had literally built the world around them. That these men might take an
attitude of ownership and proprietorship toward the laws governing that world, is
understandable. Miner’s work on entrepreneurial psychology noted a similar tendency:
successful entrepreneurs often refuse to let go until forced to do so, and hold what they have
created with amazing tenacity. 34 A good argument can be made that this is a non-
materialistic, non-hedonistic motivation: the will to found a personal kingdom, or a dynasty.
Schumpeter likens commercial and industrial success to the nearest modern equivalent to
medieval lordship. 35 The irony of the bankers’ situation was that by 1861 they had climbed
151
CHAPTER 5:
THE NEW REGIME
to the top of a society about to be destroyed.
The Missouri bankers, as bankers and entrepreneurs, occupied dual roles as change
agents in their society. There is a common notion that entrepreneurs, as agents of economic
and social change, are the benefactors of humanity. In modern economic orthodoxy
entrepreneurship is held to be the panacea for everything from inner-city slums and post-
Communist states, to sub-Saharan poverty. From this starting point it is an easy leap to
assume that entrepreneurs, as progressives, must have been Republican, pro-Union and anti-
slavery in the period immediately preceding the Civil War. Certainly this is Lewis
Atherton’s finding and assertion based on a limited data sample in Pioneer Merchants of
Mid-America. This view, however, is contested by other scholars, such as James Oates and
Eugene Genovese, whose findings show the southern planters to have been keen
businessmen. Oates and Genovese find no evidence of any connection between business
success and acumen, and liberal, democratic, egalitarian values. My research on the Missouri
bankers tends to support this latter view. Undeniably successful and innovative in an
economic sense, Missouri bankers were overwhelmingly pro-southern and pro-Confederate
when the war came.
Schumpeter, the author of the modern focus on entrepreneurship, makes no claim for
the comparative merits of the business transformations effected by entrepreneurs, or for the
resulting changes in social organization. 36 Veblen likewise asserts the amoral character of
businessman-financial activity: Rather than seeking an industriously advantageous outcome,
152
CHAPTER 5:
THE NEW REGIME
the businessman instead looks to increase his own control and gain a pecuniary profit. 37
Finance, in particular, is a notoriously bloodless field of endeavor, divorced from the needs,
values and welfare of the community at large. 38 Gain or loss in financial transactions is
transient, requiring quick decision-making and changes of direction. Therefore, the
businessman’s interest in any one position [of ownership] is fleeting. 39 Veblen, however,
notes that rather than simple pecuniary amorality, the modern captains of industry do in fact
have ulterior ends, particularly so among the greater ones. 40 There are many examples of
successful businesspeople whose personal beliefs ran counter to, or outside of, the dictates of
their money. The philanthropic contributions of Carnegie, Rockefeller and Ford were only
tenuously connected with their businesses; the same is true in the more recent cases of Turner
and Gates. Further examples crop up continuously. A June 2000 lead article in the Wall
Street Journal described the founder of Domino’s Pizza, Thomas S. Monaghan, and his
extensive support for conservative Catholic charities. 41
Even without the war, most of the Missouri bankers would have likely hit a natural
roadblock when the demands of their business grew beyond the limits of their capacities.
The personal-achiever type tends to be successful only in relatively small organizations. In
the early stages of a venture, success comes from energy, confidence, and esprit de corps.
Managing in the usual sense is only a small part of the process; the entrepreneurial leader is
an active doer as well. There are many things to get done, few people to do them, and even
fewer people with the necessary specialized expertise or knowledge. The personal achiever
153
CHAPTER 5:
THE NEW REGIME
becomes the company expert in many areas because somebody has to handle them, and
energy rather than initial knowledge becomes the determining factor in success. 42 These
people work very hard and extremely long hours, and are generalists in the true sense of the
word. They are not, however, general managers; they are more likely to be general doers and
wear many hats, changing them constantly. 43 In the long run they tend not to succeed as
corporate managers, because they run afoul of organizations and want to do things their own
way. 44 At that time there is a necessary transition to professional management and a system
of delegated authority. 45 Pre-railroad business organizations were small, and this transition
point had not been reached in 1861.
While the bankers in Little Dixie represented the apex of the power structure in Little
Dixie, they were not its only members. The broader power elite included the bankers’
clients, the large-scale farmers engaged in slave-based commercial agriculture. A one-county
study of Cooper County shows that this group of individuals turned over broadly. The
litigation of the promissory notes written at the beginning of the war went against the
defendants everywhere. It took longer in some places than others, but in the end the notes’
signatories lost everything they had. Missouri from 1865 was governed by the radical Drake
Constitution, and the Ironclad Oath severely restricted the franchise. 46 The victorious
Unionists, including the circuit judges, were in no mood for clemency toward their former
adversaries. Ex-Confederates may have gotten some relief in the courts after the General
Assembly revoked the Ironclad Oath in 1871, and when the Redemptionist governor John
154
CHAPTER 5:
THE NEW REGIME
Sappington Marmaduke, the former Confederate general, was elected in 1884. 47 It is
doubtful that many waited that long.
This de jure dispossession of thousands of pro-southern families by the end of the
war may constitute one of the causes of the post Civil-War violence and outlawry in
Missouri. From the middle 1860s to the 1880s the wave of outlawry that swept Missouri was
infamous: Eastern newspapers called Missouri 'the bandit state.' The bushwhackers,
Quantrill, Anderson, and the James and Younger brothers, have become not only part of
history but of popular culture. The case of Hiram Younger gives an idea of what happened
during the war, and what came out of it. Younger was a prosperous farmer and staunch
Union man living in Clay County, Missouri. His politics notwithstanding, Younger was
murdered by Kansas Jayhawkers – Union troops, supposedly – his farm burned, and his
property stolen. In revenge, Younger’s sons James and Coleman joined the guerrilla band of
William C. Quantrill and later Bloody Bill Anderson, participating in the massacres
Lawrence and Centralia. After the war they joined with their fellow guerrillas Frank and
Jesse James, and the later exploits of this group are well known. The James-Younger gang,
emblematic of this period, could not have operated without massive grass-roots support in
Missouri, which would have been fueled by the seemingly endless property foreclosures. To
this day there is a Robin Hood flavor to the Jesse James legend, undefeated rebels attacking
the hated sources and symbols of northern power: the banks, railroads, and express
companies. Besides the James and Younger brothers, other western outlaws fought for
155
CHAPTER 5:
THE NEW REGIME
Missouri Confederacy. 48 Paul Wellman, in A Dynasty of Western Outlaws, traces seventy
years of family connections between different gangs of western outlaws, from Quantrill’s
bushwhackers to Pretty Boy Floyd. 49 This hypothesis has thus far been more hinted at and
sensed, than systematically explored. A common belief among ordinary modern-day
Missourians is that the state is the original home of many old-West outlaws. This notion also
crops up repeatedly in popular culture. In The Long Riders, a 1980 film about the James
Gang, Charlie Ford tells a Pinkerton agent, “Do you know who you’re talking to? Don’t you
understand the kind of men sprung out of Missouri? The Jameses and Youngers, the Earps
and the Clantons, and now Bob and Charlie Ford.” 50 In Clint Eastwood’s Academy Award-
winning film The Unforgiven, the title character, William Munny, was just such a Missouri
bad man, gone west to put his past behind him. 51 Missouri may be mother to the West in
more than one sense. Further research is necessary to clarify the links between the
dispossession of the former Confederate propertied class by the courts and the postwar
violence spreading west out of Missouri. 52
The Civil War changed Missouri in some ways more than the seceding states of the
Confederacy. Substantial numbers of northerners immigrated to postwar Missouri, many
more than to the former Confederate states, effecting a structural shift in the state’s political
orientation. The southern faction in Missouri was on its back at the end of the war, and the
newcomers occupied the vacated positions of political, social, and economic power. For
156
CHAPTER 5:
THE NEW REGIME
decades Missouri had been a springboard for migration farther west, and it continued to be so
in the postwar period. But after the war the out-migration was, on balance, southern.
By one measure, the efforts of Missouri’s pro-southern leadership to finance
Missouri’s secession in 1861 was a success: It was an effective conspiracy, that succeeded in
raising millions of 1861-valued dollars for the southern cause, and has gone overlooked by
historians of the war for over a hundred and thirty years.
157
CHAPTER 5:
THE NEW REGIME
Goodbye to All That
158
CHAPTER 5:
THE NEW REGIME
CHAPTER NOTES
1
James Neal Primm, Lion of the Valley: St. Louis, Missouri (Boulder, Pruett
Publishing Company), p. 167. Ibid., p. 165.
2
Though railroads were built west from St. Louis from the 1850s, St. Louis did not
receive its first rail connection east until the completion of the Ohio & Mississippi Railroad
in 1857, which connected East St. Louis to Cincinnati, southern Illinois, Indiana, and to
Baltimore and points east via the Baltimore & Ohio Railroad (Primm, James Neal, Lion of
the Valley: St. Louis, Missouri, Boulder, Pruett Publishing Co., 1981, p. 233). Baltimore
was by this time a two-time loser in the competition of Eastern Seaboard cities for western
markets: first to Philadelphia, and later Philadelphia to New York. The major obstacle to a
through rail connection between St. Louis and the east was, of course, the Mississippi River.
The River was not successfully bridged for rail traffic at St. Louis until 1874. Parrish,
William E., A History of Missouri, Volume III: 1860 – 1875, p. 217.
3
Primm, Lion of the Valley, pp. 270–1.
4
Parrish, A History of Missouri, Volume III: 1860 to 1875, p. 219.
5
The banks’ connections with the outside world and the money-center banks, as well
as the growing tendency toward centralization, can also be illustrated in the books of Weston
Favel Birch, an early merchant, newspaper editor, and banker in Howard County, Missouri.
In 1854 Birch opened a private banking house, Weston F. Birch & Son, in Glasgow,
Missouri. [Source: The Paintings of George Caleb Bingham: A Catalog Raissonne’,
Columbia, University of Missouri Press, 1986, A356, p. 226; A78, p. 152.] Birch seems to
have been a methodical sort, and in the books of his banking house for the years 1859 and
1860, which survive, he recorded, for every check he cashed, the city in which the bank was
located. In one short year the number of cities where banks were located on which checks
were drawn declined from 26 to 12, and the percentage of checks drawn on St. Louis and
New York banks increased from 82% to 95%. In calendar 1859, of 331 checks cleared by W.
F. Birch & Son, 179 were drawn on St. Louis, 91 on New York, 16 on London, 8 on New
Orleans, and 37 on 22 other towns, from Liverpool and Boston, Richmond, Virginia, Galena,
Illinois, and Washington, D.C. In 1860 W. F. Birch & Son cashed 293 checks. This time,
211 checks were drawn on St. Louis, 66 on New York, and 16 checks on 10 other cities.
Source: Account Book, 1859 – 1860, Weston F. Birch & Son, Glasgow, Missouri, Western
Manuscripts Collection, University of Missouri, Columbia, Missouri.
159
CHAPTER 5:
THE NEW REGIME
CHAPTER NOTES
6
John Crosby Brown, A Hundred Years of Merchant Banking: A History of Brown
Brothers and Company, Brown, Shipley & Company, and the Allied Firms (New York:
privately printed, 1909), p. 123.
7
Very little activity in US demand notes, as in gold, owing to the “absence of
intelligence from New York, the telegraph not working.” St. Louis Missouri Republican,
6/19/1862, 3-8.
8
St. Louis Missouri Republican, May–June 1863. In 1861, New York was already the
primary source for financial information in the St. Louis newspapers, with 30% of the
citations in this period. Altogether, New York, Chicago, Cincinnati and New Orleans
accounted for 77% of all financial articles reprinted in the Republican, and 17 of 23 papers,
from 12 cities altogether. In this sample, London newspapers were quoted four times. The
premier trade publication of the day was Bankers Magazine, published in Boston, already
long established by the beginning of the war. In 1860 only about half of the officers of
Missouri banks received this periodical. In 1862 in one of their summaries of state bank data
the publishers of Bankers Magazine listed the banking officers of Missouri’s banks, and
which ones subscribed to Bankers Magazine. At this time, officers at 23 Missouri banks out
of a total of 44 were receiving the magazine, or 53% (Bankers Magazine, June 1860, p. 997).
If this was an attempt to shame the nonsubscribers into taking the magazine, it didn’t work;
publishing the same statistics a year later, officers at only 18 banks out of a total of 41, or
44%, were taking the magazine (Bankers Magazine, July 1863, p. 30).
9
St. Louis the Fourth City (1909), Volume 2, p. 560–4.
10
Centennial History of Missouri, (1921), Volume 3, p. 669.
11
Missouri Mother to the West, Volume 3, p. 142.
12
Encyclopedia of the History of Missouri, Volume 1, p. 495–6.
13
History of Buchanan County, St. Joseph, Union Historical Co., 1881, pp. 241–3.
14
Encyclopedia of the History of St. Louis, 1899, Volume 1, p. 238; Volume 3, p. 1384.
15
Levens and Drake, pp. 96 – 118.
16
Banking in Mid-America, p. 116.
160
CHAPTER 5:
THE NEW REGIME
CHAPTER NOTES
17
William Rufus Jackson, Missouri Democracy: A History of the Party and its
Representative Members, Past and Present (St. Louis: S. J. Clarke Publishing Co., Inc.,
1935), Vol. 3, p. 165.
18
Bench and Bar (1884), p. 18–19, portrait opposite p. 16.
19
20
Only twenty-two percent of the St. Louis bank presidents of this period were still in
St. Louis in 1870, compared to eight-eight percent of the St. Louis bank presidents of the
period 1863–1865. The numbers were less striking for the branch presidents and cashiers,
being forty-eight and fifty-nine percent respectively for the 1860–1862 group, versus
seventy-seven percent and seventy-five percent for the 1863–1865 group. The exception is
the St. Louis cashiers. For undetermined reasons the men who were cashiers in 1860–1862
were quite about equally likely to remain in St. Louis as those who were cashiers in 1863–
1865, seventy-five percent and sixty-eight percent respectively.
21
Liberty Tribune, 12/13/1867, 2-4. The Daily News’ History of Buchanan County and
St. Joseph, Missouri, From the Platte Purchase to the End of the Year 1898 (St. Joseph: St.
Joseph Publishing Company, 1898), p. 516.
22
Robert W. Donnell life sketch. Boonville Weekly Eagle, 8/9/1872.
23
Schumpeter, p. 226.
24
Schumpeter, p. 197.
25
Schumpeter, p. 199.
26
Schumpeter, p. 78.
27
Schumpeter, p. 86.
28
Schumpeter, p. 132.
29
At least judging by its voting patterns in the election of 1860. Lincoln, of all people,
carried the city, receiving in St. Louis a majority of all the votes cast for him in all the
southern states. Primm, Lion of the Valley, p. 244.
161
CHAPTER 5:
THE NEW REGIME
CHAPTER NOTES
30
Letter to Gen. Rosecrans demanding Union military protection and authority to raise a
loyal regiment, 3/20/1864 (also signed by E. M. Samuel). Letter dated 3/20/1864, Official
Records, Series I, Volume 34, Part 2, pp. 382–4.
31
Michael Fellman, Inside War: The Guerrilla Conflict in Missouri During the
American Civil War (New York: Oxford University Press, 1989), p. 5.
32
Including the distinguished jurists Edward Augustus Lewis and General Bela Metcalf
Hughes; and the Reverend Thomas Johnson of Shawnee Mission.
33
Schumpeter, p. 87.
34
Miner, p. 33. Schumpeter, p. 92.
35
Schumpeter, p. 93.
36
Schumpeter, p. 90.
37
Veblen, p. 24.
38
Veblen, p. 20.
39
Veblen, p. 21.
40
Veblen, p. 20
41
Wall Street Journal, 6/21/2000, 1-1.
42
Miner, p. 34.
43
Miner, p. 34.
44
Miner, p. 33.
45
Miner, p. 36.
46
162
CHAPTER 5:
THE NEW REGIME
CHAPTER NOTES
47
Parrish, History of Missouri, Volume III: 1860 to 1875, p. 254. Lawrence O.
Christensen and Gary R. Kremer, History of Missouri, Volume IV, 1875 – 1919 (Columbia,
University of Missouri Press, 1997), p. 17.
48
Bass reportedly rode with Quantrill’s bushwhackers during the war, which made him
an alumnus of the same organization as the James and Younger brothers. Eakin and Hale,
Branded as Rebels, p. 19. When Ringo was shot in Tucson, Arizona in the 1880 one of his
few possessions was a photograph of Shelby taken at Boonville during Price’s last raid of
1864. Dyer, Boonville: An Illustrated History, p. 123.
49
Paul I. Wellman, A Dynasty of Western Outlaws (Lincoln: University of Nebraska
Press, 1986), p. 13 – 14.
50
The Long Riders, 1980, directed by Walter Hill. Of the famous adversaries at
Tombstone’s OK Corral in October, 1881, Wyatt Earp was too young to have fought in the
Civil War, but had been deputy sheriff in Lamar, Missouri in 1868. Casey Tefertiller, Wyatt
Earp: The Life Behind the Legend (New York: John Wiley & Sons, Inc., 1997), p. 4. The
Clanton family had come originally from Tennessee, but had lived many years in Callaway
County, Missouri, in the heart of Little Dixie, before trekking further west.
51
The Unforgiven, 19 , directed by Clint Eastwood.
52
The spread of lawlessness out of Missouri was much feared after the war. In 1866 U.
S. General Grenville Dodge, now stationed at Fort Leavenworth, Kansas, wrote that his spies
informed him of a planned westward exodus of old bushwhackers out of Missouri, to avoid
arrests, unfair trials, and lynching. Dodge feared that these Missouri ex-Confederates might
make common cause with the Plains Indian tribes against the United States government in
the territories. Fellman, Inside War, p. 235.
163
APPENDIX I:
METHODLOGY AND SOURCES
Except for Claiborne Fox Jackson’s incriminating correspondence captured after
the Battle of First Boonville, a traditional historical sources such as diaries, letters, and
personal memoirs regarding this aspect of the War either do not exist or have not yet been
discovered. The early deaths of Jackson and Price b silenced the two men in the best
position to understand the banks’ role in the rebellion. Newspapers ceased publication in
most of the state and Union military authorities heavily censored what was left, so there
was little meaningful commentary on the banks in the Missouri press. In late 1861 the St.
Louis newspapers had some sharp things to say about the banks, but this was quickly
eclipsed by bigger news inside the state and out. If the South had successfully separated
from the Union, and if Missouri had joined it as a twelfth Confederate state, the bankers
of 1861 would have been remembered as patriots. But the War ended differently, and the
surviving bankers had no incentive to talk about their involvement in a treasonous and
failed rebellion.
Another reason for the paucity of ‘traditional’ sources is the transitory and
ahistorical nature of business activity. Businesspeople, in the author’s experience, have
less sense of history than just about anybody: The events of even last month or last year,
are irrelevant. Also, these people often do not hold their occupations in high regard. The
few merchants and capitalists who kept diaries seldom wrote about their business
a
See Chapter 3.
b
Jackson in 1862 and Price in 1867.
163
APPENDIX I:
activities. 1 History and literature contain many examples of businessmen who considered
business a means to an end, and a vulgar one at that. One of the most universal dreams of
the rewards of business success, is to retire from commerce and set up as a gentleman.
Four main primary sources formed the basis for this paper: biographical and
demographic data on the individual bankers and their clients, published statements of the
banks’ financial condition, circuit court records of the banks’ suits on the defaulted notes,
and records of sheriffs’ sales of property in Cooper County. Copious data is available
from these sources, but none of it easily obtainable or manageable. The sources,
however, have the advantage of being somewhat impartial. People are notoriously self-
serving when describing their own actions, particularly if they are parties to a major
controversy. All the surviving sources on the Missouri banks of the period were
originated by parties who are at least to some extent disinterested: Bookkeepers and
newspaper editors, circuit clerks, census takers, and muster officers. This study was
conducted using a combination of microhistorical and quantitative historical techniques.
First, biographical, financial and court data had to be gathered point by point from many
different sources. Then, quantitative techniques could be used to draw conclusions about
aggregate behavior.
Demographic and biographical data on the bankers and their customers was more
widely dispersed than the other two primary sources. This data was obtained from the
manuscript census, military records, county histories, newspaper reports, tombstone
164
APPENDIX I:
inscriptions, marriage records, and obituaries. This meant that a fair amount of digging
had to be done to piece together a single life history, and there were many individuals.
Besides the hundred and twenty-five men who were bank officers between 1861 and
1865 there were several thousand signatories of the promissory notes, and few of these
persons were more than locally prominent. In the three Little Dixie counties examined in
detail, there were a total of 471 promissory-note cases involving over 600 defendants.
Each individual required an average of ten reference lookups, and often many more.
Determining loyalty to the Union during the Civil War also was no simple matter.
In 1862 the staunchly pro-Union Reverend William Greenleaf Eliot, pastor of St. Louis’
Unitarian Church of the Messiah, wrote to Missouri Governor Hamilton Gamble that in
St. Louis “There were all shades of opinion, from that kind of neutrality which is hatred
in disguise, through all the grades of lukewarmness, ‘sympathy,’ and hesitating zeal up to
the full loyalty which your memorialists. . . claim to possess.” 2 This was true of the rest
of the state as well, and loyalty was a matter not only of degree but also of timing. By
June 1865 significant organized resistance to federal military power had ceased, whatever
several million ex-rebels had been up to earlier. But at what point had rebel sympathizers
become ‘loyal?’ When they ceased active resistance to the government, or when they
ceased giving any aid or comfort to resistors? Or when they ceased to voice opposition?
There was, and is, no good answer to this question.
165
APPENDIX I:
I am not attempting to deconstruct the Civil War; but for purposes of this paper,
the dividing-line between ‘loyal’ and ‘rebel’ was sometimes difficult to find.
Fortunately, this kind of logic-chopping was necessary in only a few cases. Usually a
banker had his politics very much on display. The best indicator of a banker’s politics
was, of course, whether he served in one or the other army. An example of one who
served was William Payne, President of the Fayette, Howard County branch of Bank of
the State of Missouri. Born in Kentucky in 1816 and an early settler of the Boonslick,
Payne farmed with twenty-one slaves in Moniteau Township, Howard County. Little is
heard of him and nothing of his politics, until the start of the Kansas troubles. In June
1855 Payne attended a pro-southern Kansas meeting in Fayette; in July he represented
Howard County at the Lexington Proslavery Convention. 3 In September he served on the
committee of a public meeting of slaveholders of Boone and Howard Counties. 4 When
the war broke out in 1861 Payne was forty-five years old. He served first as Captain,
later Major of Company E, Woods’ Regiment, Missouri Cavalry, CSA, his sons Robert
and George serving in the same unit. In November 1865 the family’s long tenure in
Howard County ended with the sale of the Payne farm to George McCullough of Ohio. 5
William Payne died at the home of his son in Nebraska City, Nebraska in August 1887. 6
Requiescat in pace.
It takes little guesswork to figure out William Payne’s politics, but not everybody
was quite so obvious. For one thing, fewer than one in five of the bankers personally
166
APPENDIX I:
served, bearing out the bitter Southern adage ‘A rich man’s war, and a poor man’s fight.’ 7
For the others, a little more digging was necessary. Joseph C. Moore, the Cashier of the
Union Bank of St. Louis branch at Charleston, Missouri, spent the war as a non-
combatant. However, Captain J. A. Ewing, commanding the Union military post at
Charleston, had quite a bit to say about Moore in a dispatch written in 1864. Captain
Ewing wrote that Moore had chaired a mass meeting in Charleston in February of 1861
that passed a secession resolution, had stood as candidate for captain of the first rebel
company made up in Charleston, and had three cousins out with the guerrillas. 8 He had
not paid his commutation tax for that year. Captain Ewing, who evidently didn’t think
much of his man, concluded “All that kept him from being in arms against the
government was because he could not get into office and was too aristocratic to go in as a
private.” 9 This was enough for me.
For the few difficult cases, I employed several criteria to decide political
affiliation. Support for the secessionist candidate John C. Breckenridge in the election of
1860 was strong proof of political orientation. I also used published lists of rejected
voters in the elections of 1866 and 1868, in which Confederate sympathizers were barred
from voting. The rejected voter lists, however, must be taken with a grain of salt.
Contemporary critics charged, with some justice, that the lists were radical-Republican
witch-hunts. County histories also sometimes indicated a person’s war politics, though
southern sympathies tended to be under-reported. By the 1870s and 1880s, when most of
167
APPENDIX I:
the county histories were written, many people wished to distance themselves from the
rebellion. I arbitrarily decided that any banker who owned six or more slaves was most
probably a southern sympathizer unless there was strong evidence to the contrary.
Captain David Waldo owned eight slaves when the war broke out, but his pro-Union
sentiments were well documented. Multiple indicators of political sympathy were better
than one: I did not consider an instance of participation in a pro-southern Kansas
meeting or in the Lexington Pro-Slavery Convention during the 1850s, or sons in
Confederate military service to be proof of anything by itself.
The second major source of data on the banks is their published financial
statements. The banks chartered under the Act of 1857 were required to publish quarterly
financial statements in a major newspaper at their principal place of doing business.
Seven of the nine banks were headquartered in St. Louis, and the St. Louis newspapers
continued uninterrupted publication throughout the war. The best single source was the
St. Louis Triweekly Missouri Republican, but the Daily Missouri Republican and the
Daily Missouri Democrat helped fill in gaps. The Farmers Bank of Missouri was
headquartered in Lexington, Missouri, and the nearest newspaper of consequence was the
Liberty Tribune. Bankers Magazine, Journal of the Missouri Legislature, and the St.
Joseph Morning Herald were also helpful sources.
For two of the nine banks (the Southern Bank of St. Louis and the Western Bank
of Missouri), a complete series of financial statements could not be recovered, and
168
APPENDIX I:
consequently an accurate picture of these banks’ financial condition could not be
reconstructed. The two banks were accordingly excluded from the consolidated data,
which should not affect the overall industry picture. The Western Bank was a smallish
bank headquartered in St. Joseph with only two branches, in Glasgow and Fulton, and not
a significant player on the contemporary scene. The Southern Bank, while a large and
important bank, was only one of a total of seven St. Louis banks of issue, the remainder
of whose financial statements are included in the analysis presented in Appendices II and
III.
Financial data are only meaningful in the context of long-term trends and industry
standards. For Missouri’s Civil War-era banks these contextual requirements were
largely met. The published data were not presented in a modern format, but were
sufficiently complete to allow for the reconstruction of basic financial statements.
Balance sheets for seven out of the nine Missouri banks of issue could be reconstructed
for the period 1858 – 1865, and from these profit and loss could be calculated. These
data could then be examined using modern techniques of financial analysis. This was the
only source extant for determining the financial condition of the banks during the war
years. There was extensive and sophisticated commentary on financial institutions and
markets in the New York press, but not in Missouri. Furthermore, wartime censorship
was in effect. Trend data for the banks, and detailed technical analysis are presented in
Appendices II and III. Comparing Missouri banking, however, to U. S. banking as a
169
APPENDIX I:
whole was not possible. There is no data extant that I know of which gives macro-level
industry data for cash, loan portfolio, bad debt, and so forth for the U. S. banking industry
during the Civil War. Secondly, there is the question of the reliability of the numbers.
The Missouri banks’ original books of record have not been found, and no standard rules
of accounting procedure existed at the time, by which financial data was to be reported.
Regarding the statements’ veracity, there was probably less reason to cook the books in
1860 – 1865 than there is now. There was no informed readership of financial analysts,
institutional investors, securities firms and market regulators for the bankers to deceive.
Most investors, at least big ones, would have been insiders, so published statements
wouldn’t have fooled anybody important. Since Missouri was under martial law, the
bankers were not in a position to conceal anything substantive from the military
authorities. The penalties for uncooperative bankers as the war dragged on, became
increasingly severe.
A more subtle difficulty in properly interpreting the numbers is the relative
ignorance of the bankers of 1861. Banking is centuries old and bankers are sophisticated
people, but in 1861 they lacked most of the tools, methods and data now available. Two
of the three modern financial reports, income statements and statements of cash flow, are
very recent developments. Modern financial practice tends to put less weight on the
balance sheet because it reports historical cost, rather than current market value. The
balance sheet data however, is the data the 1860 bankers themselves used for financial
170
APPENDIX I:
decision-making, insofar as they used accounting data at all. The problem is, the bankers
were not using their accounting data as guides to management decision-making, as would
now be the case. Rather, they were reacting to events as they occurred.
The richest source was the circuit court records of the litigated bank cases.
Thousands of these cases clog the court records of this region. Considerable obstacles
had to be overcome in analyzing this material. Surviving records are archived in rural
Missouri county seats, original documents sometimes crumbling at the touch, recorded in
faded ink, jumbled, and frequently incomplete. Luckily, the calligraphy is wonderful.
The bank cases themselves are described in 19th-century legal and financial jargon; the
transactions are obsolete and unfamiliar to the modern reader. A number of county
courthouses burned during the War, some more than once, and their records destroyed.
Relevant cases are buried in a mass of other proceedings, from treason and murder to
unlicensed dram shops. Isolating bank cases per se does not complete the necessary
sifting: bad checks are written in every time and place, and this was a period of economic
collapse. Also, a single case appears multiple times in the Circuit Court minute books
before a judgment is reached. Owing to the legal shorthand used by the clerks and poor
or nonexistent indexing, it is difficult to tell which entries belong together. 'William H.
Trigg vs. Nathaniel Sutherlin, et al.', in the Cooper County Circuit Court minute books
refers to five different suits brought for defaulted notes written in 1861.
171
APPENDIX I:
The cases summarized in the circuit court minute books and court papers are the
bare bones of money borrowed and not paid, sued for and recovered. The cases typically
differ only in the names of the banks and the defendants and the amount of money at
issue. The following is a representative example:
Bank of St. Louis

against
Walker H. Finley Geo Anderson
Wm A. Finley Franklin Plummer
Now on this day comes the plaintiff by her attorney and the defendants
though legally served and Solemnly called come not but make default and
this cause is taken up and submitted to the Court and the Court finds that
said defendants are indebted to said plaintiff in the sum of thirty two
hundred eighteen 45/100 dollars the same being founded on a note for the
direct payment of money at 10 per cent interest
It is therefore adjudged by the Court that said plaintiff recover against said
defendants the said sum of thirty-two hundred and eighteen 45/100 dollars
together with his costs in this behalf expended and that she have therefor
execution. 10
It is not singly that these cases are distinguishable from ordinary cases of reneged
debts, but in the aggregate. ‘Confederate’ defaulted notes can be distinguished from
‘innocent’ defaulted notes, as follows:
1. ‘Confederate’ bank cases are concentrated in counties known for having a substantial
number of Confederate sympathizers during the War.
2. Such cases do not occur anyplace where Federal authority was quickly established
and maintained, such as St. Louis, Jefferson City, or Cape Girardeau.
3. Most Confederate cases involve small groups of individuals writing promissory notes
back and forth to each other. Defendants of ‘innocent’ defaulted notes resulting from
the general economic collapse are grouped randomly.
172
APPENDIX I:
4. The defendants in the Confederate bank cases can be identified as southern

sympathizers by reference to biographical or military sources.
5. German settlers were pro-Union virtually to a man, and there are no Germans named
as defendants in the Confederate cases.
Employing this methodology, on, for instance, the eighty-seven promissory-note
cases litigated in Cooper County that originated in 1861, seven are ‘innocent.’ That is to
say, the defendants wrote bad checks without any ulterior motives. In the remaining
eighty-two cases, the makers, payees, and assignees can be shown to be Confederate
sympathizers. Fifty-two of these cases name the same defendants in various
combinations.
Below are examples of six actual promissory notes assigned to William H. Trigg,
owner of a private (non-state chartered) banking house in Boonville. The notes were
written over a three-week period, between Camp Jackson on May 10 and the Battle of
Boonville on June 17, 1861. In the notes, the same eight persons appear over and over
again acting in different combinations. Nathaniel Sutherlin, for example, is co-maker of
two different notes and payee of four. These notes, for a total face amount of $2,313.78,
were discounted (i.e., sold) to Trigg, who received in return these pieces of paper:
1. May 28, 1861 Nathaniel T. Allison and James H. Hay cosign a promissory
note payable to Nathaniel Sutherlin for $400.00 payable in 120 days at 10
percent interest per annum post maturity. Sutherlin discounts the note to
William H. Trigg. 11
173
APPENDIX I:
2. June 8, 1861 Nathaniel Sutherlin and Walker H. Finley cosign a

promissory note to William E. Jamison for $525.32 payable in 120 days at
10 percent interest per annum post maturity. Jamison discounts the note to
Trigg. 12
3. June 8, 1861 William M. Rucker and Nathaniel T. Allison cosign a

promissory note to Nathaniel Sutherlin for $315.20 payable in 120 days at
10 percent interest per annum post maturity. Sutherlin discounts the note
to Trigg. 13
4. June 8, 1861 George W. Wallace and William M. Rucker cosign a

to Trigg. 14
5. June 8, 1861 Walker H. Finley and George W. Wallace cosign a

to Trigg. 15
6. June 19, 1861 William T. Allison, Nathaniel Sutherlin, and William M.

Rucker cosign a note to James H. Hay for $458.06 payable in 120 days at
10 percent interest per annum post maturity. Hay discounts the note to
Trigg. 16
The final source, less utilized than the first three, was the records of property
transfers in the County Recorder’s Office in Cooper County, Missouri. The object here
was to determine which property transfers had taken place as a result of a sheriff’s sale
directed by the court, and where the plaintiff in the case was a bank. The bank cases,
regarded separately, show many features, which distinguish them from property sales
resulting from defaulted promissory notes litigated by individuals. For one thing, they
accounted for the bulk of the money–$52,694.23, for the period 1858–1867. Also,
174
APPENDIX I:
defaulted promissory notes litigated by the banks were overwhelmingly defaulted in
1861, and judgment obtained by the September term of the court. Of 26 bank cases
altogether in this period, three cases were adjudicated prior to 1861, 23 in 1861 and 1863,
and none after 1863. For banks to be seeking redress for defaulted promissory notes was
itself unusual. Furthermore, the September 1861 cases were different from the (few)
bank cases adjudicated earlier. The three cases adjudicated prior to 1861 involved the
sale of town lots; no acreage was sold at sheriff’s auction prior to 1861. The promissory
notes adjudicated in 1861 and 1863 disproportionately involved acreage; seventeen out of
twenty-three sales. 17 A thorough, multi-county examination of the farm acreage that
changed hands from the litigation of the defaulted note cases was beyond the scope of
this work. However, any further study attempting to link the postwar violence in
Missouri with the turnover in land in the state, will start here: first with identifying
sheriffs’ sales in which the plaintiff was a bank, and then a longitudinal study of the
defendants in these cases.
Besides Hubbard and Davids’ Banking in Mid-America and Cable’s The Bank of
the State of Missouri, there were a number of other secondary sources that provided
useful information for the story I have attempted to tell. Lewis Atherton’s The Pioneer
Merchant in Mid-America analyses the role of merchants in the commercial and social
life of the western frontier. Atherton does not cover banking issues except to describe
financing methods used by merchants operating far from their suppliers, with primitive
175
APPENDIX I:
transportation and poor and almost nonexistent currency. Atherton does argue that in
these frontier communities merchants were forced to assume banking functions in the
absence of banks per se, and extend credit to customers and finance purchase ultimately
through the extension of credit to themselves from their eastern suppliers. My own
research corroborates this; the first generation of Missouri bankers came mostly from the
merchant class. James M. Primm, Economic Policy in the Development of a Western
State, Missouri 1820 – 1860 covers aspects of banking in this period, particularly the role
of state intervention and guidance in policies affecting internal improvements. Besides
describing the formation of the Bank of the State of Missouri, Primm’s topics include
corporation law, debt relief, internal improvements and the promotion of agriculture, all
of which touch on banking. Except for the section on the State Bank, however, no
consideration is given to banks below the macro-policy level. The state banking act of
1857 chartering additional banks in the state to supplement the activities of the Bank of
the State of Missouri is dealt with only briefly. Perry McCandless’ History of Missouri
1820 – 1860 surveys the history of Missouri in the antebellum period, including the
migratory patterns of settlers from the southern states, and development of the state
economy. R. Douglas Hurt’s Agriculture and Slavery in Missouri’s Little Dixie also
deals with these themes. Hurt’s work is particularly useful regarding the financing
requirements imposed by Missouri’s agricultural economy and distance from major
markets.
176
APPENDIX I:
There are a number of excellent financial and economic histories of the United
States describing the antebellum state-banking regime and the functioning of currency in
the business economy. Bray Hammond’s Banks and Politics in America: From the
Revolution to the Civil War and Davis R. Dewey’s State Banking Before the Civil War
describe the development of the state banking system and banks of issue in the late
antebellum period. This is useful information for understanding the context of Missouri’s
finances and later developments, but Missouri is not specifically addressed. The financial
history of the war years and after is well covered by Hammond’s Sovereignty and an
Empty Purse: Banks and Politics in the Civil War which describe the issuance of the
greenbacks, and the establishment of the national banking system. Hammond’s book
gives a detailed account of events at the highest level of government and banking in
Washington, New York, Philadelphia, and Boston regarding the financing of the war, and
the groping for expedients that preceded the Legal Tender Act of 1862 and the National
Banking Act of 1863. Missouri, however, receives not a single mention. Hammond’s
perspective is that of a central banker, which in fact he was before entering academics.
Margaret G. Myers’ A Financial History of the United States contains a very useful
overview of financial aspects of the Civil War, including Treasury borrowing, Jay Cooke,
the National Banking Act, wartime inflation, and other topics. As with Hammond, the
books’ focus is Washington and New York. In the event, Myers’ account of the Civil
War period is only one episode in the context the larger story she tells, and is contained in
177
APPENDIX I:
a single chapter of twenty-five pages. Robert P. Sharkey’s “Money, Class, and Party:
An Economic Study of Civil War and Reconstruction” examines the politics of money,
and the effects of the greenback inflation on the business cycle, farming and commodity
prices during and after the war. Again, this is useful for placing Missouri in
macroeconomic context rather than detailing events within the state. Richard H.
Timberlake’s Monetary Policy in the United States analyzes the independent treasury
system, and the monetary demands of the war in the 1860s and how this was met both
North and South, the issuance of the greeenbacks and the passage of the National
Banking Act. However, political maneuverings, social developments, and state banking
are outside the scope of Timberlake’s book. The same is true of A. Barton Hepburn’s A
History of Currency in the United States, which is an excellent source of quantitative
information on banking and currency. Irwin Unger’s The Greenback Era: A Social and
Political History of American Finance, 1865 – 1879 is also written from the perspective
of high finance and high politics, and is useful in understanding the transition from state
to national banking and a national currency, represented by the greenback circulation
following the war and prior to resumption of specie convertibility. Don C. Barrett’s The
Greenbacks and the Resumption of Specie Payments, 1862 – 1879 contains a useful
discussion of the differing political ideologies with regard to the gold standard versus fiat
money. Again, banking at the state level is not considered and the book deals primarily
with the fiscal conditions of the national government and the congressional debate over
178
APPENDIX I:
the resumption of specie payments. A Hundred Years of Merchant Banking by John
Crosby Brown is an insider’s history of the investment banking firm of Brown Brothers,
later Brown Brothers Harriman. This is, again, an East-Coast and largely Transatlantic
perspective on finance, but still is informative regarding the difficulties of banking at
long distance, and how obstacles of communication and transportation were coped with
at the time.
Histories of Missouri at the outset of the Civil War recount the details of the
political crisis in Missouri, the attempted pro-southern coup by governor-elect Claiborne
Fox Jackson, and the countercoup effected by Nathaniel Lyon, Frank P. Blair and others.
Dramatic as these events are, the topic of banking is entirely omitted. William E.
Parrish’s History of Missouri 1860 – 1875 covers the details leading up to war in
Missouri, the military campaign and the political struggle for control inside the state, but
has less to say about social conditions generally, and nothing whatever about banking and
currency except to note that money was scarce. Parrish’s Turbulent Partnership:
Missouri and the Union, 1861 – 1865 provides useful background material regarding the
political orientations of major figures in the state, and also the chaotic political situation
resulting from the struggles between the competing state governments and the military
authorities, which disconnected the policy level in the state from local enforcement and
coordination. The book essentially tells the story of the provisional government’s
establishment, Hamilton Gamble’s efforts to maintain law and order and respect for the
179
APPENDIX I:
civil authority within the state, and the eventual triumph of the radicals at the end of the
war. Albert Castel’s and Thomas Goodrich’s, Bloody Bill Anderson: The Short, Savage
Life of a Civil War Guerrilla, Michael Fellman’s Inside War: The Guerrilla Conflict in
Missouri During the American Civil War, and Daniel O’Flaherty’s, General Jo Shelby–
Undefeated Rebel give histories of war from the southern side in Missouri, detailing the
various battles, skirmishes, raids, reprisals and counter-reprisals. These books make
riveting reading, and provide a good bit of useful biographical detail on important
individuals, but have little to say about the civilian economy and nothing about finance.
Castel’s General Sterling Price and the Civil War in the West describes the events
leading up to Price’s acceptance of the secessionist cause, the taking up of arms against
the Union, and details of his later military career. The sole mention of Price’s
involvement with banking is to note that he was in financial difficulty at the time of the
gubernatorial nominating convention of 1860, and that his friends arranged that he be
appointed to the best-paid civil service position in the state, Missouri Banking
Commissioner. Castel does not elaborate further on Price’s banking interests and duties
in 1860 – 1, or on those of the governor-elect, Claiborne Fox Jackson.
Many state and local histories of Missouri were useful sources of dates and
names. William Rufus Jackson’s Missouri Democracy: A History of the Party and its
Representative Members, Past and Present provides useful biographical information on a
number of important individuals. Caroline Bartels’ The Civil War in Missouri Day by
180
APPENDIX I:
Day: 1861 – 1865 and Floyd Shoemaker’s Missouri Day by Day are useful chronologies
of events in the state. Neither work makes any attempt to integrate this information into a
larger story or theme. James Neal Primm’s The Lion of the Valley: St. Louis, Missouri
1764 – 1980 is a history of St. Louis from its founding until the present. As the center of
Missouri commerce and industry from earliest times, the book provides useful
information of St. Louis’s development in this period, the extension of its influence
throughout the state, and the effects of war on the city’s commerce and its eventual
eclipse by Chicago. Banking is once again treated only cursorily. In short, existing
histories of Missouri are useful sources of names, dates, events and chronologies which,
from the perspective of banking, have to be reintegrated into a different whole and tell a
different story. Higher-end, analytical histories seeking to relate events in Missouri to the
larger canvas, as I have said, tended to omit or ignore materials on banking and were
consequently of less use than the more basic chronicles. A list of the many county and
local histories is included in the bibliography.
Several works provide biographical sketches of a number of important bankers
during this period. Among these are Lewis C. Atherton’s “James and Robert Aull:
Pioneer Merchants in Western Missouri,” James Goodrich’s “David Waldo,” F. A.
Sampson’s “The Honorable John Brooks Henderson,” and Jeffrey Adler’s “Yankee
Colonizers and the Making of Antebellum St. Louis.” All these men were bankers in the
Civil War period, but the historical monographs on them tend to omit details of their
181
APPENDIX I:
financial and business dealings, particularly the issue of war financing.
Regarding entrepreneurship, besides Schumpeter and Veblen, other valuable
insights were provided by Paul Wilken’s Entrepreneurship: A Comparative and
Historical Study, John B. Miner’s A Psychological Typology of Successful Entrepreneurs,
Chell, Haworth and Brearley’s The Entrepreneurial Personality: Concepts, Cases and
Categories, and Greenfield, Strickon and Aubey’s Entrepreneurs in Cultural Context.
182
APPENDIX I:
METHODOLOGY AND SOURCES
CHAPTER NOTES
1
Atherton, for instance, has this to say: “. . . [C]onsiderable evidence indicates that
merchants did not consider their occupation distinguished. For example, if a man
engaged in merchandising and a number of other pursuits at the same time, he was likely
to preserve all the records but those relating to trade. . . . John O’Fallon of St. Louis
started as a merchant, but as his interests widened he kept a record of his philanthropies
and correspondence with noted individuals and let the preservation of his business
records lapse. Solon Robinson wrote voluminously on the subject of agriculture, but his
Account Book seems to be the only record remaining of twenty years spent as a merchant.
. . . John C. McCoy [President of the Southern Bank of St. Louis branch at
Independence, 1862 – 1863] opened the first store in what is now Kansas City, Missouri,
in 1833. He too, penned a record of his experiences as an early merchant, stimulated no
doubt by the great growth of Kansas City during his lifetime. Otherwise, the mercantile
group in the West seems to have remained silent, while men in other forms of public life
recorded biographical material.” Atherton, The Pioneer Merchant in Mid-America, p 30.
2
Primm, Op Cit., p. 265.
3
Boonville Weekly Observer, 6/16/1855, 1-5. Liberty Tribune, 7/20/1855, 1-2.
4
5
6
Obituary, Columbia Missouri Statesman, 8/31/1887, 3-6.
7
Federals: Abram Comingo, Charles Everts, John Brooks Henderson, William P.
Lindner, Henry S. Lipscomb, Alexander Mitchell, and Henry Stoddart. Confederates:
John J. Anderson, William C. Boon, Joseph Byron Cates, Thomas Crutcher, Benjamin
W. Dudley, David A. Ely, Sr., John S. Harris, William Payne, Samuel H. Stewart, and
James T. Thornton.
8
Citing the Charleston [Missouri] Courier, 2/4/1861.
9
Dispatch, Captain J. A. Ewing, Commanding Post at Charleston, Missouri to
Captain Holloway, Assistant Adjutant General, dated 3/23/1864 from Charleston,
Missouri. Official Records, Series I, Vol. 34, Part II, pp. 708–9.
10
Bank of St. Louis vs. Walker H. Finley, et al., Pettis County (Missouri) Circuit
Court Minute Book E, p. 472, 6/15/1865 [PE645147].
183
APPENDIX I:
METHODOLOGY AND SOURCES
CHAPTER NOTES
11
William H. Trigg vs. Nathaniel T. Allison, James H. Hay, Nathaniel Sutherlin;
Cooper County Circuit Court Case # 54, March, 1863 Session [CO633054].
12
William H. Trigg vs. Nathaniel Sutherlin, Walker H. Finley, William E. Jamison;
13
William H. Trigg vs. William M. Rucker, Nathaniel T. Allison, Nathaniel
Sutherlin; Cooper County Circuit Court Case # 79, March, 1863 Session [CO633079].
14
William H. Trigg vs. George W. Wallace, William M. Rucker, Nathaniel
Sutherlin; Cooper County Circuit Court Case # 1, March, 1863 Session [CO633001].
15
William H. Trigg vs. Walker H. Finley, George W. Wallace, Nathaniel Sutherlin;
16
William H. Trigg vs. William T. Allison, Nathaniel Sutherlin, William M.
Rucker, James H. Hay; Cooper County Circuit Court Case # 78, March, 1863 Session
[CO633078].
17
Source: Cooper County, Missouri Circuit Court Records, Boonville, Missouri.
184
APPENDIX II: SOURCES AND
USES OF FUNDS
An analysis of the banks’ financial statements yields several important findings. 1
First, it shows the extent to which Missouri banks were invested in Confederate real
estate, and is thus a political litmus test not only of the banks, but also of specific
counties. Second, the data shows the institutional continuity of the Missouri banks, in the
transition from the old banking system to the new. There was no violent overthrow of the
banks, confiscation of their assets and the mass execution of their managers, but rather, a
draining of capital out of the old system. The prewar branch banks survived as isolated
stand-alone upcountry banks increasingly cut off from the financial mainstream. Capital
increasingly flowed into the new system of national banks and greenback currency. Had
the banks gone into liquidation it is questionable who or what would have been around to
litigate for the recovery of the defaulted promissory notes in the latter years of the war. If
the signatories of the promissory notes had gotten off scot-free, the future of Missouri’s
antebellum slaveholding elite might have been quite different. As it was, the successor
owners of the banks were able to press their claims in court.
To a much greater extent than today, Missouri banks prior to and during the Civil
War can be studied in isolation, separate from most outside influences. National
currency was almost nonexistent before the Civil War and many states, including
Missouri, had laws prohibiting the acceptance of out-of-state bank notes as legal tender
for debts. In 1861 there was no national capital market through which individuals could
185
USES OF FUNDS
borrow money from distant banking centers, such as Cincinnati, New York or
Philadelphia, let alone London or Paris. Moreover, in 1861 banks and bankers controlled
interest rates, access to virtually all commercial credit, and the entire monetary system.
Thus, the banks of the day constituted a world in themselves.
From 1858 to 1865 Missouri banking passed through three distinct periods: The
first was the prewar boomerism of 1858 through 1860, characterized by rapid expansion
in assets, loan portfolio, circulation, and number of branches. The second period began at
the end of 1860 and lasted until the middle of 1862, and was characterized by great
turbulence and uncertainty. The future of Missouri then was by no means assured –
whether it would secede with the other southern states, or remain in the Union. Financial
markets and institutions are always sensitive to any perception of heightened risk, and
Missouri in 1861 was risky indeed. The third period began in mid-1862 and lasted for
the duration of the war, and was marked by the establishment of an uneasy hegemony in
Missouri by the Union military. This military dominance was paralleled by the
establishment of a more stable monetary and banking regime in the state, first through the
1862 Act of Congress which put U. S. Treasury notes in circulation, and, the following
year, by the passage of the National Banking Act. In this period the banks reorganized as
national banks, spun off or closed their branches, and for the most part ceased issuing
state banknotes. In Missouri the banks survived, just, albeit in a nearly dormant state.
The first period is of most interest to the social historian, because the banks were pivotal
186
USES OF FUNDS
in subsequent developments in land ownership and the later fortunes of the pro-southern
faction in Missouri.
From their establishment in 1858 up until the beginning of the war the banks were
well functioning money machines. Defaulted loans, however, rose steadily in this period
both absolutely and as a percentage of loan portfolio and of total assets. Since the banks
had just commenced business during 1858, reported bad debt during this early period had
started at zero and had not yet reached an equilibrium level. It appears, however, that the
banks were loaning recklessly, and the trend was worrisome even if it had not been
interrupted by the war. The political situation was getting more threatening all the time,
but by all appearances the business climate remained optimistic until almost the very
outbreak of war. Revenue cycles were short; loans ran for periods of not more than a
year, and generally much less than that. a In the last years before the war businessmen
and bankers alike were willing to chance one more hand, before the game was up.
Time did finally run out, of course, at the end of 1860. On November 28 of that
year, following Lincoln’s election all Missouri banks except the Exchange Bank in St.
Louis suspended specie payments. Out-of-state banks responded by deeply discounting
Missouri currency. The price of eastern exchange – bank drafts issued by leading eastern
banks and essential for doing business with that part of the country–skyrocketed. The
Missouri banks’ customers, the stockmen and large-scale commercial farmers who
exported their products east and south, found their agricultural production suddenly worth
187
USES OF FUNDS
much less than it had been. Farmers who could afford to sit tight and await better prices
did so. Outstanding lines of credit were repaid or defaulted rather than rolled over. In
Missouri in the first quarter of 1861 business as usual virtually halted.
The banks’ first quarter 1861 financial statements give many indications of the
growing crisis. Exchange maturing and matured, which had been the lion’s share of the
loan portfolio, virtually dried up. At the same time the banks’ holdings of discounted
promissory notes rose sharply. This, and for the next six months, was the period of the
quiet raid on the banks’ assets: the writing and discounting of the thousands of
promissory notes by Confederate sympathizers. The published bank statements for the
quarter ending September 30, 1861 show a sharp punch-up in bad debt, as these notes
began to fall due and were protested. The worst time for the banks came in October
1861. At the same time that defaulted promissory notes were flooding into the banks, the
political crisis in Missouri reached its height. Former Governor Sterling Price, one of the
most popular and respected men in Missouri and now a General in Confederate service,
commanded a rebel army at large in the central part of the state. On October 6 Price’s
forces captured the important river town of Lexington, Missouri, to the general
enthusiasm of its pro-southern citizenry. Meanwhile confidence in Union General
Fremont as a military commander and a civil administrator was evaporating, owing to
that general’s secretive, arbitrary, and high-handed ways. While the banks were being
buried in bad paper, raids on the banks’ assets became violent and blatant. Confederates
a
See Chapter One.
188
USES OF FUNDS
continued to write fraudulent promissory notes but also just made off with the money
outright. The officers and directors of the Merchants Bank of St. Louis branches at
Osceola and Warsaw – southern men all–looted their respective institutions, and took
everything that wasn’t nailed down. To forestall this happening elsewhere, Union
military commanders seized and sequestered funds wherever possible in the rest of the
state. In St. Louis military authorities forced government loans on the bankers.
Bankers responded to this catastrophe with drastic measures of their own. Debt
capital, much more volatile than equity, was withdrawn from the banking system.
Simultaneously the bankers reduced all outstanding financial obligations over which they
had control. The banks contracted their outstanding circulation and stopped paying out
monies due to other banks. b Deposits remained relatively stable, only because the banks
refused to pay out specie: depositors would have had to accept their money in banknotes
of dubious value. Lastly, the banks cooked their books, to conceal how dire their
condition really was. 2 Owing to these measures–about as subtle as brain surgery with a
Colt forty-five–the banks survived as going concerns. During 1861 – 1862, when the
outcome for the country and for Missouri was not at all assured, the banks were relatively
more liquid with respect to current liabilities than they had been before the war. The
banks had reduced their liabilities, especially circulation, in the June 1861 – June 1862
period, faster than their cash reserves depleted. Gold and silver meanwhile fled to safe
havens, out of state wherever possible, some as far away as the Bank of England. By the
189
USES OF FUNDS
end of 1861 there was virtually no money left in Missouri. The banks survived, but as
part of a paralyzed, illiquid economy.
This chaotic state of affairs continued up into the first months of 1862, though in
retrospect the crisis point for Missouri’s financial system had been reached and passed
the previous October. In November 1861 Lincoln replaced Fremont with General Henry
W. Halleck as ranking Union commander in Missouri, and the Union army established a
shaky authority in the northern part of the state. 3 Confederate General – formerly
Missouri Banking Commissioner – Sterling Price abandoned his advanced position at
Lexington and marched south. It is clear in retrospect, though it wasn’t then, that Price
couldn’t have held Lexington, let alone Missouri, given the size of his forces and his
extended supply lines. After losing the important battle of Pea Ridge, Arkansas in early
1862, Confederate armies largely stayed out of Missouri for a good two years, though the
bushwhacker situation continued to worsen. 4 For Missouri Unionists, it was henceforth
mostly a matter of battening down and holding on.
By the March 1862 and especially the June 1862 reporting, the banks had returned
to some measure of liquidity with the appearance of large quantities of U. S. Treasury
notes in the state. Missouri was by no means calm in this period, but the federal
government was definitely on top, and there was no immediate organized southern threat
to the state. The only paying customers in town were the federal and state governments
for military procurement, and the banks became increasingly dependent on this business.
b
See page
190
USES OF FUNDS
In the third period, from mid-1862 until the end of the war, the banks were
practically dormant and did very little business, at least in the civilian economy. Their
asset values and loan portfolios shrank in real and in nominal terms. The number of
performing loans in portfolios likewise shrank, as the banks were drowned in defaults.
The economy was wrecked and if anything became worse after 1863, owing to the
increasing activity of the bushwhackers. Also, indications are that rather than book the
sizable losses which they had in fact incurred over loans, both legitimate ones and the
promissory note scheme, that a large number of nonperforming loans continued to be
carried on the banks’ books, when in fact they were in default. These bad loans were
never recognized, and were parceled out in 1864 and 1865 to the newly independent
branch banks. 5
The banks were required by the Missouri Banking Act of 1857 to publish
quarterly statements of their financial condition, and these reports form the basis of the
following analysis. Compiling accounting information by hand is a slow and arduous
process, and beyond the statutory reporting requirements it is doubtful if the bankers of
the day placed much reliance on such data for decision-making. Whether they relied on
the information that could be derived from their ledger books or kept their business in
their heads, the critical categories for these bankers were loan portfolio and bad debt,
cash, circulation and deposits, and obligations to and from other banks. Two
presentations of this data are made: An overview of the 1858 – 1865 period, and a
191
USES OF FUNDS
quarter-by-quarter review of the critical, transitional period from the beginning of 1861 to
the end of 1862. The banks’ finances were driven by what happened to their loan
portfolios, and these data are analyzed first.
Evident even at a cursory glance is the extreme volatility of these accounts. There
is nothing subtle about what can be seen of the banks’ operations through their
accounting data. Whatever it was like for the bankers at the time, this is good news for
historians. Even if record keeping was not up to modern standards, there can be no
mistaking when certain events took place. A one or two percent change in an account
level is of doubtful significance, then as now. A tripling of suspended debt as a
percentage of total portfolio, which happened between December 1860 and June 1861,
would have been noticed and reacted to.
To summarize, during the critical 1861 – 1862 period the following accounts
changed by at least 25% in the quarter indicated, from the previous quarter:
Period End Accounts Up Accounts Down

3/31/1861 Suspended debt Due from other banks
Due to other banks
6/30/1861 Notes discounted Exchange
Suspended debt
Total cash
Notes on other banks
Due to other banks
Due from other banks
9/30/1861 None Exchange
Total cash
Due to other banks
192
USES OF FUNDS
Circulation
Deposits
12/31/1861 Notes discounted Exchange
Suspended debt
Due to other banks
Total cash
Circulation
3/31/1862 Suspended debt Due from other banks
U.S. Treasury notes c Due to other banks
Circulation
Total cash
6/30/1862 Total cash None
U. S. Treasury notes
Deposits
9/30/62 Notes on other banks None
Due to other banks
12/31/1862 None Due from other banks
Loan Portfolio
The banks’ loan portfolios contained exchange maturing and matured, notes
discounted, and suspended debt. ‘Exchange’ referred to bills of exchange used for
financing long-distance trade. Notes discounted were promissory notes payable after a
stated period, and were the vehicle used for secessionist financing in Missouri during the
critical months of 1861. Suspended debt was past-due, defaulted, or non-performing
debt.
193
USES OF FUNDS
The banks’ aggregate portfolio of outstanding loans grew by double digits
throughout prewar period. Exchange in the prewar years was the largest segment of the
banks’ portfolio, approximately double the amount of notes discounted. Exchange was
also growing fastest, from about $6m in December 1858 to about $10m in December
1860. All these trends reversed by December 1861: The aggregate portfolio had shrunk
by a third, chiefly owing to a huge decline in exchange. Meanwhile notes discounted had
jumped dramatically, and now represented the largest portfolio category. Suspended
debt, meanwhile, tripled in absolute dollars, and went from 2.1% of total portfolio in
December 1860 to 12.0% in December 1861. d After that the total portfolio declined
every reporting period in the war. There was a very small increase in exchange in
December 1863, but this was more than offset by the decline in notes discounted.
Everything was down at the December 1864 reporting except suspended debt.
Suspended debt did not decline until the December 1865 reporting, and that occurred in
the context of a 22% decline in the total portfolio. This was the period in which the
banks spun off or closed their branches.
Exchange almost doubled from December 1858 to December 1860, going from
$5m to about $10m. This, more than any measure in the banks’ financial statements,
indicate the rapid growth of the Missouri economy in the late prewar period, particularly
the state’s external markets. This makes the collapse in December 1861 all the more
c
From zero the previous quarter.
d
Ref. graph and discussion of Suspended Debt 1860 – 1862, p. .
194
USES OF FUNDS
striking. Exchange shrank still further in December 1862, recovering only slightly the
following year before dropping still further in 1864 and 1865. The decline in exchange
reflected the overall decline in trade, but also the new technology of express companies
sending T-notes to New York for settlement of debts. 6
LOAN PORTFOLIO
OVERVIEW: 1858 - 1865
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$0
12/58 12/59 12/60 12/61 12/62 12/63 12/64 12/65
PERIOD END
SUSPENDED DEBT
EXCHANGE MATURING AND MATURED
NOTES DISCOUNTED
Notes discounted were promissory notes written from one person to another,
pledging payment of a sum of money after a certain stated time, usually at interest.
Banks bought up at a discount promissory notes written by creditworthy individuals, so
that the banks became the final payees. The discount from face value paid for the note
represented an additional, implicit interest payment to the banks upon the maturation of
195
USES OF FUNDS
the note. Compared to exchange, notes discounted were a secondary line of business for
the banks before the war. But by the December 1861 reporting notes discounted jumped
to about $6.5m, the highest level recorded in the entire 1858 – 1865 period. After this
one spike, however, notes discounted declined steadily for the remainder of the war. The
biggest single drop occurred in December 1865, down 49% to about $2.7m, the lowest
level recorded in the period under study. As noted elsewhere, 1864 – 1865 was the
period in which the banks spun off or closed their branches, and all categories of their
balance sheets shrank accordingly.
A quarter-by-quarter look at the loan portfolio for 1861 – 1862 shows that in the
March 1861 reporting the total portfolio shrank for the first time since the banks had
opened for business. But the big changes in the 1861 – 1862 period occurred chiefly
between the March and September, 1861 reportings. In June and September 1861 the
total portfolio declined by 14% and 15% respectively, the largest for the entire 1861–
1862 period. Exchange in June declined to about $6m from $10m six months earlier, and
notes discounted by the banks jumped by about $1m to just under $6m. Many of the
matured bills of exchange were probably defaulted on maturity and written over into
suspended debt. The dollar amount of suspended debt more than doubled in this period,
going from 2.1% of the total portfolio in December 1860 to 6.8% in June 1861. After the
September 1861 reporting the size of the total portfolio changed little for the remainder of
the 1861 – 1862 period, with incremental declines in exchange offset by increases in
196
USES OF FUNDS
LOAN PORTFOLIO
DETAIL: 1860 - 1862
$16,000,000
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$0
12/60 3/61 6/61 9/61 12/61 3/62 6/62 9/62 12/62
PERIOD END
NOT ES DISCOUNT ED EXCHANGE MAT URING AND MAT URED SUSPENDED DEBT
suspended debt. Notes discounted were down slightly by June 1862 but increased
marginally from the June to December reporting period. Exchange remained almost
completely unchanged. The total portfolio increased by 6% in December 1862, chiefly
due to an increase in suspended debt.
Exchange declined but held relatively steady from December 1860 to March
1861. The biggest drop in exchange for the entire period under study occurred between
April 1 and June 30 1861, and was reflected in the June reporting: Exchange dropped
$3.7m, or 40% to $5.8m. This was followed by additional major declines in the
September and December reportings. By December exchange had fallen to about $2.8m,
less than one-third the level of one year previously. Exchange continued to fall rapidly
197
USES OF FUNDS
over the next six months, dropping a further 34% by June 1862. For the last six months
of 1862 exchange was virtually stagnant, at less than $2m (from high of about $9.5m
December 1860). From June 1862 and for the entire remainder of the war, exchange
remained at or below $2m.
After remaining steady in the March 1861 from the previous quarter, the banks’
notes discounted increased steadily through December 1861. The big run-up in notes
discounted took place in the second quarter of 1861, increasing almost $1m, or 19% from
the previous December. The gain from June 1861 to September 1861 was smaller,
followed by a larger jump in December 1861, about $.5m, or 9.5%. Much less happened
in other periods. Notes discounted declined about $.5m in June 1862, then stagnated at
just over $6m for the last six months of 1862. Except for a 2% increase recorded in
December 1862, notes discounted made continuous stepped declines for the remainder of
the war.
Suspended debt
SUSPENDED DEBT
OVERVIEW: 1858 - 1865
increased steadily from when
$2,500,000
$2,000,000 the banks were first organized
$1,500,000
$1,000,000
$500,000 in 1858, throughout the prewar
$0
12/58 12/59 12/60 12/61 12/62 12/63 12/64 12/65 period. Particularly large in the
PERIOD END
prewar period was the jump
reported in December 1859, more than twice the size in the increase of the overall loan
198
USES OF FUNDS
portfolio during the same period. Suspended debt increased by a further 50%, in the
December 1861 and December 1862 reportings. Suspended debt was flat through
December 1863, at just short of $2m. Suspended debt decreased in December 1864 and
December 1865, in the latter period sharply so, though still remaining much higher than
the June 1861 level. This was the period when the banks were closing or spinning off
their branches. 7
More worrisome than the dollar increase was the fact that suspended debt was
increasing as a proportion of total loan portfolio, and as a proportion of total assets. By

SUSP DEBT:TOTAL PORTFOLIO
the end of the prewar period,
OVERVIEW: 1858 - 1865
December 1860, suspended

25% 19.5% 20.9% 20.8% 18.5%
20%
12.0%
15% debt was 2.1% of the total
10%
5% 1.1% 1.7% 2.1%
0% portfolio, high by modern
12/58 12/59 12/60 12/61 12/62 12/63 12/64 12/65
PERIOD END standards but nothing
compared to what the banks were in store for. In the June 1861 reporting, suspended debt
reached 6.8% of the total portfolio. Suspended debt went straight up from there, peaking
at 21% of the total portfolio in the December 1863 reporting. Write-offs and divestitures
by December 1865 only reduced suspended debt to 18.5% of the total portfolio, almost
nine times the highest prewar level reached in December 1860.
The 1861 – 1862 quarterly statements show that the big increase in suspended
debt in the first six months of 1861 took place chiefly in 2nd quarter 1861, by the June
199
USES OF FUNDS
1861 reporting. Suspended debt increased 72%, at the same time the overall portfolio
declined by 16%. Suspended debt more than doubled on a dollar-for-dollar basis, and
SUSPENDED DEBT tripled as a percentage of total

DETAIL: 1860 - 1862
portfolio. This meant, simply,
$2,500,000
$2,000,000 that loans were being paid off
$1,500,000
$1,000,000
$500,000 or defaulted as they fell due,
$0
12/60 3/61 6/61 9/61 12/61 3/62 6/62 9/62 12/62
but were not renewed: the
PERIOD END
banks had no new business
coming in. A smaller increase in suspended debt (16%) was recorded in September 1861,
then major gains December 1861 (30%) and March 1862 (23%). Percentage increases
declined after that, though remaining out of proportion to the total loan portfolio.
The banks did not count government indebtedness as part of their loan portfolios
and did not report it as such. However, government loans came to be a major portion of
the banks’ business during the war, when the private sector was atrophying. Government
lending was new in another way for the banks, namely long-term lending, which they had
previously not done. By the war’s end the banks were substantially invested in
government securities, no doubt sometimes unwillingly. By 1865 the government
constituted the lion’s share of the banks’ business. With the sole exception of December
1864, government indebtedness increased every reporting period rising from about $400
thousand in 1858 to just under $800 thousand in December 1860, and to $1.7m by
200
USES OF FUNDS
December 1863. It is worth noting, however, that the banks recorded the Army’s
seizures of coin at the different branch as miscellaneous assets or as off-balance sheet
items. The banks probably wished to note and publicize these seizures, but not dignify
them with the name of loans. 8 The banks’ government debt holdings dropped by
December 1864 to about $1.2m, then spiked in December 1865, rising to about $2.5m.
With the sole exception of December 1864, government indebtedness as a percentage of
total assets increased every reporting period from 1858 to 1865. By 1865 the
government’s war financing needs had been replaced by the legal requirement for the
newly-chartered national banks to purchase U. S. Treasury bonds.
EXTENDED LOAN PORTFOLIO

OVERVIEW: 1858 - 1865
$18,000,000
$16,000,000
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$0
12/58 12/59 12/60 12/61 12/62 12/63 12/64 12/65
PERIOD END
NOT ES DISCOUNT ED EXCHANGE MAT URING AND MAT URED

SUSPENDED DEBT T OT AL GOVERNMENT INDEBT EDNESS
201
USES OF FUNDS
GOVT DEBT:TOTAL ASSETS Real Estate

OVERVIEW: 1858 -
Real estate has been
20% 17.4%
15% 10.6% discussed in Chapter Four, the
7.9% 7.3%
10% 5.9%
2.5% 3.2% 3.7%
5%
Promissory Notes. In the
0%
12/58 12/59 12/60 12/61 12/62 12/63 12/64 12/65
context of the banks’ other
PERIOD END
accounts, as suspended debt
decreased, real estate increased. Given the wartime collapse in prices, this was no more
good news for the banks than the mass foreclosures of farmland during the Great
Depression. Missouri real estate had a war raging on top of it and was virtually
worthless. The banks had good reason for waiting to sell: Except for a slight decline in
March 1862, real estate holdings increased continuously from December 1858 to
December 1863, to about $670 thousand. Real estate dropped marginally in December
1864, and much more significantly in December 1865, from about $650 thousand to
REAL ESTATE & FURNITURE

about $450 thousand. The
OVERVIEW: 1858 - 1865
largest run-ups were June 1861
$800,000
$600,000 – December 1861, the largest
$400,000
$200,000 dollar increase to date, showing
$0
12/58 12/59 12/60 12/61 12/62 12/63 12/64 12/65 a fair amount of real estate
PERIOD END
winding up in bank receivership
202
USES OF FUNDS
even then. The next big jump was from December 1862 to December 1863, when real
estate went from about $540 thousand to about $670 thousand. The banks’ real estate
holdings declined in December 1864 and particularly December 1865 when the banks
were reorganizing as national banks under the law of 1863. Much of the seized real
estate and suspended debt was probably let go at fire sale prices to the newly independent
branch banks, to do with as they would. In any case, these assets disappeared from the
books of the parent banks.
The 1861 – 1862 quarterly statements show that the big gains in the banks’ real
estate holdings took place outside of this period. This is consistent with the court records
of the litigation of the banks’ defaulted promissory notes, which only started in the first
half of 1862 at the earliest.

REAL ESTATE & FURNITURE
DETAIL: 1860 - 1862
The bulk of this litigation
$600,000
took place in 1863 and 1864.
$400,000
$200,000 Real estate remained stable

$0
12/60 3/61 6/61 9/61 12/61 3/62 6/62 9/62 12/62 June 1861 – September 1861,
PERIOD END
showing no strong pattern. A
major increase was reported in December 1861, going to about $470 thousand from $350
thousand the previous quarter. Real estate is down somewhat in March 1862, then makes
steadily increases for the remainder of the 1861–1862 period.
203
USES OF FUNDS
Total Cash
In 1861 the banks’ cash holdings consisted of specie, sight exchange, and
banknotes of other specie-paying Missouri banks. Specie was gold and silver coinage,
bullion, and gold dust. Sight exchange was matured exchange, or checks payable on
demand. Following the U. S. Congress’ passage of the Legal Tender Act on February 25,
1862, U. S. Treasury notes became a fourth category of cash, making their first
appearance in Missouri in March of that year.
From December 1858 to December 1860 the banks’ cash holdings fluctuated
narrowly, between $4.5m and $5m. By December 1861, however, the banks’ total cash
was up but its composition had changed significantly. Specie was disappearing from
TOTAL CASH
OVERVIEW: 1858 - 1865
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$-
12/58 12/59 12/60 12/61 12/62 12/63 12/64 12/65
PERIOD END
COIN, BULLION, SPECIE NOTES ON OTHER BANKS

SIGHT EXCHANGE U.S. TREASURY NOTES
204
USES OF FUNDS
circulation, either leaving the state entirely or being hidden and hoarded. By December
1862 and subsequently total cash holdings – specie and paper alike–were way down.
Cash declined consistently after that, at an increasing rate: down only slightly in 1863
but down 16% in December 1864, and 24% in December 1865. In spite of wartime
inflation, in the later years of the war the banks had less and less cash.
Starting in the December 1860 reporting the banks’ specie holdings dropped from
the previous period, this trend continuing into the following year. Since the banks had
suspended specie payments in November 1860, these declines in specie balances were
not the result of ordinary payouts, but rather army seizures and sequestrations,
government loans and capital flight. There was also the matter of the defaulted
promissory notes that the bankers had bought from southern men in the summer of 1861.
No record exits of what medium of payment was tendered for the notes, but it was
presumably specie. Over the remaining years of the war the banks’ specie holdings fell
steadily, declining a marginal 0.9% in December 1863, then 43% in December 1864 and
45% in December 1865. Specie holdings at the December 1865 reporting were at the
lowest level by far for whole period under study, about $900 thousand, from about $3.3m
in December 1860, the last reporting period before the outbreak of war. Hard money had
fled Missouri. 9
Banks’ holdings of banknotes issued by other banks moved unevenly during the
prewar period, though increasing significantly in December 1860. By December 1861
205
USES OF FUNDS
notes almost doubled from the previous year, to $2.8m, the highest level for the period
under study. Notes remained low after that but made a major increase in December 1864
to $1.7m from $1.1m in the previous year, up 59%. Notes declined again in December
1865, to about $.8m, or by 55%.
The 1861 – 1862 quarterly statements show wide quarterly percentage swings in
cash volume. Following the drying-up of business finance in Missouri and the
maturation of much of the banks’ loan portfolios, the banks were at first awash with cash.
The changes in total cash in 1861 occurred chiefly between March and June of that year,
when total cash rose 37%, to over $6m. The June reporting period showed the
composition of the banks’ cash had changed radically as well, with notes on other banks
TOTAL CASH
DETAIL: 1860 - 1862
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$0
12/60 3/61 6/61 9/61 12/61 3/62 6/62 9/62 12/62
PERIOD END
COIN, BULLION, SPECIE NOT ES ON OT HER BANKS SIGHT EXCHANGE U.S. T REASURY NOT ES
206
USES OF FUNDS
more than doubling from the previous quarter. Cash dropped 38% in September to about
$3.8m, chiefly owing to a huge decline in notes on other banks (from about $2.8m to
about $1m), though specie drops significantly also. Cash rose again in December 1861
by 40% to about $5.3m. Overall, however, cash dropped by 13% between June and
December 1861, with specie way down but notes on other banks maintaining at over
twice its level of one year before. By December 1861 specie was down slightly again,
but notes on other banks returned to the June 1861 level. By March 1862 the banks’
specie holdings rose by about $.5m, but notes on other banks fell below $1m, making an
overall drop in cash of 27%. By June 1862 specie holdings rebounded to their highest
level since June 1860, but notes on other banks were down by two-thirds from their
December 1861 level. Still, total cash in June rose 34% from the previous quarter. There
was a small decrease in cash between December 1861 and June 1862; but in the
following period, June to December 1862, cash dropped by 23%. This last increased
some by the June and September 1862 reporting, before declining somewhat in
December. But overall, notes remained close to the levels of September 1861 and March
1862. This seems to indicate that an equilibrium was reached by this point in the war. U.
S. Treasury notes first appear in the banks’ March 1862 statements; by June there is a
massive infusion of this new money into Missouri (from under $100 thousand in March
to about $680 thousand in June), keeping the banks’ total cash at the December 1861
level. 10
207
USES OF FUNDS
The principal drop in the banks’ specie holdings during 1861 – 1862 occurred
between the June 30 and September 30 1861 reporting periods when specie dropped from
about $3.4m to about $2.6m, or 21%. The following quarter there was a much smaller
decline, to about $2.4m. Overall, specie holdings dropped 26% between June and
December 1861. Specie increased to over $3m by March 1862, and to about $3.6m in
June, 43% over the previous quarter. In June 1862 specie stood at the highest level of the
whole war, reflecting government payments on military contracts and some return of
sequestered bank funds. The high level of specie holdings was only temporary, however.
From June 1862 onward, specie represented a declining proportion of the banks’ cash
holdings, and was increasingly replaced by paper. Specie declined successively in
September and December 1862. By December 1862 coin had dropped 19% over the
preceding six months, to about $2.9m.
By June 1861 notes had increased by 92% since December, to an unprecedented
$2.7m. Equally striking was the huge decline in notes three months later in September
1861 before rising again in December 1861 to about $2.8m, twice the level of one year
earlier. By March 1862 notes on other banks are down to the lowest level (about $.8m)
for the entire 1861 – 1862 period. By September 1862 notes on other banks are back
close to the last prewar (December 1860) level. Notes decreased in December 1862 to
just over $1m, compared to the December 1860 level of $1.4m.
208
USES OF FUNDS
Sources of Funds
Besides equity capital, which is discussed in the following chapter, the banks’
sources of financing were circulating banknotes and deposits. Both were current
liabilities, by law redeemable by holders on demand. Such regulation as there was,
which was minimal, was concerned with the redeemability of banknotes, rather than with
the safety of deposits. Not until after the Panic of 1857 did the volatility of bank deposits
become recognized, and how in a panic the depositors could clean a bank out in a single
day. 11 Bank note holders tended to be widely dispersed, and unlikely to present the mass
of circulation for immediate redemption.
Missouri banks’ outstanding circulation increased from December 1858 through
December 1859 by 18% to $6.8m and maintained at that level through December 1860.
CIRCULATION OUTSTANDING Circulation dropped

OVERVIEW: 1858 - 1865
significantly by the December
$8,000,000
$6,000,000 1861 reporting, to $5.3m, a
$4,000,000
$2,000,000
drastic deflation, and this before
$0
12/58 12/59 12/60 12/61 12/62 12/63 12/64 12/65
the appearance of any federal
PERIOD END
currency. After that circulation
decreased steadily through the remainder of the war, down to about $.7m in December
1865. These large decreases in circulating banknotes late in the war (47% and 46% in
December 1863 and December 1864 respectively), had no effect with regard to available
209
USES OF FUNDS
money supply, as state banknotes were increasingly supplanted by the federal greenback
issues.
A quarter by quarter analysis of 1861 – 1862 shows circulation stable from
December 1860 to June 1861, at around $6.8m. This is the highest level recorded for the
CIRCULATION OUTSTANDING entire 1858–1865 period. In

DETAIL: 1860 - 1862
$8,000,000 September 1861 circulation
$6,000,000
$4,000,000
dropped 36% to about $4.2m,
$2,000,000
before rebounding in
$0
12/60 3/61 6/61 9/61 12/61 3/62 6/62 9/62 12/62
December 1861 to about
PERIOD END
$5.4m. Circulation dropped
28% in March 1862 to under $4m, the lowest level yet in the entire 1858–1862 period,
and continued dropping every quarter subsequently to the end of 1862.
Deposits increased only slowly from December 1858 through December 1860,
running between about $2.5m–$3m. By December 1861, however, deposits had dropped
DUE DEPOSITORS 30% from the December

OVERVIEW: 1858 - 1865
1860 level, to about $1.8m:
$6,000,000
$4,000,000 This was a run on the banks,

$2,000,000
$0
even though the banks had
12/58 12/59 12/60 12/61 12/62 12/63 12/64 12/65
PERIOD END
suspended specie payments.
Deposits recovered to about
210
USES OF FUNDS
$2.7m in December 1862, then increased each year to the end of the war. The rise in
deposits probably reflected improving public confidence in the banks, combined with a
lack of investment alternatives or opportunities for capital flight. Deposits reached $4.8m
in December 1865, more than twice the prewar level.
During the 1861 – 1862 period, deposits declined March 1861 and June 1861 by
5% and 12% respectively. The major drop-off in deposits occurred between June 30 and
September 30 1861, when bank deposits fell from $2.5m to about $1.7m, a decline of
DUE DEPOSITORS
DETAIL: 1860 - 1862 one-third. The September
$4,000,000 1861 reporting was the nadir

$3,000,000
$2,000,000 in depositor confidence.
$1,000,000
$0 Deposits increased slightly in
12/60 3/61 6/61 9/61 12/61 3/62 6/62 9/62 12/62
PERIOD END December 1861, then
rebounded more strongly in March 1862 and June 1862. In this last reporting deposits
increased 36% over the previous quarter, to the highest level since March 1861. In
September of 1862 deposits were off somewhat, before beginning a sustained advance
the following quarter which lasted the duration of the war.
Clearinghouse Accounts
The two clearinghouse accounts – due from other banks and due to other banks –
were used for settlement activities, i.e., for closing outstanding balances due to or from
211
USES OF FUNDS
banks at the end of a day, or period, once all individual checks and transactions had been
paid. These accounts were zeroed out by the banks writing a single check to each of their
correspondent institutions. Consequently, these accounts were so volatile that widely
spaced single-point data is of limited use in a fundamental analysis. The due-from and
due-to accounts do not balance each other, since the chartered banks were not a closed
system: Funds entered from, and left to, out-of-state banks, as well as in-state savings
institutions and non-chartered private banks. However, the clearinghouse accounts are
crude gauges of the overall level of business activity, and the mutual trust and confidence
between the banks themselves. The due-from and the due-to accounts were both were
higher in the 1858 – 61 period than later, and both were sharply down in the later years of
the war.
The due from account rose steadily in the prewar period, and reached its highest
level yet in the December 1860 reporting. The due from account then advanced further in
December 1861, to over $1.7m, the highest point for the entire period under study. But
by December 1862 the due from account had declined steeply, and in December 1863
reached the lowest level for the entire 1858–1865 period, about $180 thousand. The due
from account increased again in December 1864 to about $1m, reflecting the revival of
the banking system, rather than of business. The due from account declined again in
December 1865 to about $700 thousand. This followed the divestiture and closure of the
branch banks, and the reporting banks’ reduced size.
212
USES OF FUNDS
Due to other banks was the accounts-payable counterpart to the due from account.
CLEARING HOUSE ACCOUNTS

OVERVIEW: 1858 - 1865
$2,000,000
$1,500,000
$1,000,000
$500,000
$0
12/58 12/59 12/60 12/61 12/62 12/63 12/64 12/65
PERIOD END
DUE FROM OTHER BANKS DUE OTHER BANKS

As with the latter, the aggregate due to account was much higher from 1858 to 1861 than
later. The banks’ aggregate due to account doubled between December 1858 and
December 1859, to $1m. The due-to account gained only marginally over the ensuing
two years, increasing to just over $1.2m in December 1861. As with the due-from
account, the due-to account collapsed the following year, in December 1862 to $500
thousand, less than half its level a year earlier. The due-to account then sank still further
in December 1863, before turning around again in 1864 – 1865. But never again in the
1858 – 1865 period did this account reach the December 1860 level.
213
USES OF FUNDS
The 1861 – 1862 quarterly statements show that the banks’ aggregate due from
account declined sharply from December 1860 to March 1861, from just over $1.1m to
about $750 thousand, or by 33%. There were huge increases in the due from account
CLEARING HOUSE ACCOUNTS

DETAIL: 1860 - 1862
$2,000,000
$1,500,000
$1,000,000
$500,000
$0
61
61
61
62
62
62
0
2
/6
/6
/6
3/
6/
9/
3/
6/
9/
12
12
12
PERIOD END
DUE FROM OTHER BANKS DUE OTHER BANKS
following the political crisis in Missouri in the summer and fall of 1861, from March
1861 to June 1861, and from September 1861 to December 1861. This left the banks
heavily exposed to each other in terms of monies due and receivable, and also banknotes
of other banks held. e Over the ensuing months the bankers drastically reduced their
mutual indebtedness, evidently conducting business with other banks on a cash-and-carry
basis. The crisis was recorded not by the March 1862 reporting, in which the
clearinghouse accounts dropped to a low level that lasted for the duration of the war.
214
USES OF FUNDS
This represented the attainment of a sort of equilibrium, reflective of the low level of
business activity in the state. The real crisis occurred in October 1861 when the banks
stopped accepting each other’s notes, f and showed in the steep run-up in the
clearinghouse accounts in the December reporting. The due from account then more than
doubled in the June 1861 reporting, to over $1.6m, 43% higher than the peak attained six
months previously. The following quarter the account dropped by 57% to about $700
thousand, but reached its high for the entire period under study in December 1861 at just
over $1.7m. By March 1862 the due from account had dropped to about $500 thousand,
or a loss of 72%, and this time stayed down.
The 1861 – 1862 quarterly statements show that a big drop in the due to other
banks account March 1861 from December 1860, to about $.75m from slightly over $1m,
before reaching a new high in June 1861 of over $1.2m, the highest level reported in
entire 1858 – 1865 period. But March 1862 marked the lowest point in the entire 1861–
1862 period. The due-from account increased marginally in subsequent quarters to the
end of 1862, but stayed well below the prewar level or the peaks recorded in 1861.
e
Ref. graph of loan portfolio in 1861–1862, p. .
f
See above, p. .
215
USES OF FUNDS
CHAPTER NOTES
1
September 1862 figures for Notes Discounted, Exchange Maturing,
Exchange Matured, Exchange, Suspended Debt, and Total Portfolio are plugs,
interpolated from June 1862 and December 1862. Only the State and Farmers banks
reported detailed figures here; the other banks did not.
Published financial statements for the Merchants Bank in March 1862 could not
be located. Figures shown are plugged, interpolated from the January and June 1862
statements. Similarly, no statement of financial condition for the Union Bank of
Missouri as of September 30, 1861 was located. Union Bank figures for this period are
likewise plugged, interpolated from the Bank’s June and December 1861 statements.
2
By every account, normal business activity all but ceased after the outbreak of
hostilities. Nevertheless, the aggregate amount of notes discounted reported by the banks
stayed high, declining only slightly until the very end of the war. Indications are that the
banks were carrying these notes as active, performing loans when in fact they were not.
3
4
5
The total loan portfolio decreased in 1865 without corresponding increases in
suspended debt, cash, or real estate.
6
The cost of remittances by express in the shape of Treasury notes drops only
$1.50 a thousand, which makes funds transfer by this method competitive with the
purchase of exchange. St. Louis Missouri Republican, 5/24/1862, 3-8.
7
In the same period as the banks’ suspended debt decreased, the banks’ cash, real
estate, and notes discounted also decreased, indicating that the notes were not paid off.
8
For instance, the Union Bank of St. Louis in April, 1862 designated as
‘miscellaneous assets’ $57,564.57 in coin seized at the Charleston (Missouri) branch and
deposited at the Bank of Memphis, Tennessee. St. Louis Missouri Daily Republican,
4/13/1862, 2-4.
9
Since having a bank account was by no means a common in the 1860s, this was a
thing of wealthy people and somewhat citified people persons in the money economy.
When bank deposits and specie accounts declined, the money presumably did not
216
USES OF FUNDS
CHAPTER NOTES
disappear into mattresses, but instead fled the state, ending up in New York or even in
London.
10
After the published June, 1862 statements, Treasury notes virtually disappear
from the banks’ statements. Since they were circulating in the country in ever greater
numbers during the war, they were probably included in notes of other banks in
subsequent financial reports. Not all banks continued to report T-notes as a separate
category after June 1862. Instead, most banks classed Treasury Notes along with Notes
on other banks.
11
Dewey, State Banking Before the Civil War, p. 215.
217
APPENDIX III: LIQUIDITY, LEVERAGE, AND
PROFITABILITY: THE BANKS’ OPERATIONS IN RETROSPECT
Appendix II analyzed data available to the bankers at the time, and that would
have informed their decisions. However, many new diagnostic measures have developed
since 1860, including liquidity, leverage, and certain ways of calculating profitability.
These have depended on a higher standard precision and uniformity in the reporting of
accounting data than existed then. The following analysis is conducted with the benefit
of historical hindsight, and employing tools to explore aspects of the banks’ operations
that their owners could not have known. What makes this important is the question of
what the bankers themselves knew, and then how they acted on the information available
to them. The bankers were not in a position to react to subtle changes in, say, the debt to
equity ratio, but rather to something big happening which was immediately evident to
everybody and could not be ignored. Drastic symptoms were not wanting during this
period, however. The war was blowing up right outside, and sometimes inside, the
bankers’ doors. Financial institutions are highly sensitive to any sort of crisis, and crisis
was evident to the most Pollyanna-ish of observers.
What bankers of the day did not know makes a long list: Macroeconomic data on
interest rates, rates of inflation, bankruptcies, and so forth was only available sporadically
and anecdotally, in articles reprinted from the newspapers of other cities. Bankers
Magazine was an excellent trade magazine that makes good reading even today, but its
consolidations of industry data came too late to be of much use with current decision-
making. Most of the techniques of financial analysis used today had not yet been
218
invented, and computing power was nonexistent. No standards of financial reporting
existed that made it possible to compare one company comparable to another. During the
war the Union military authorities censored such data as was available. Wartime
inflation and the effect of the war on the market value of bank assets further distorted the
banks’ published performance results. An additional complicating factor was the
multitude of circulating currencies, which made the U. S. currency situation resemble a
foreign exchange market.
Liquidity
Financial liquidity measures the speed with which assets can be converted into
cash, with no loss in value. Three common gauges of liquidity are net working capital,
the ratio of net working capital to net assets, and the cash ratio. These measures show that
the banks became progressively less liquid as the war went on; and that they maintained
such liquidity as they were able to by shrinking their total assets. Lastly, even in the
banks’ reduced state there was very little business to employ what capital they had
available. The result was that their cash balances in relation to their total assets remained
higher during the war than previously.
The banks’ total assets grew throughout the prewar period, from just over $15m in
December 1858 to about $22m in December 1860 then declined steadily thereafter. By
December 1865 total bank assets were down to just over $14m, the lowest level in the
entire reporting period, wartime inflation and overvalued assets (loan portfolio and real
219
estate) notwithstanding. Even as the banks shrank in overall size, their asset holdings
became progressively less current. Current assets are those which will be consumed or
converted into cash within one year. Up through the prewar period, current assets i were
well over 90% of total assets, from a high of 95% in December 1858, slowly but
consistently declining to 93% in December 1860. Throughout the war the percentage of
current assets dropped steadily, from 89% in June 1861 down to 62% in December 1865.
CURRENT AND NONCURRENT ASSETS

OVERVIEW: 1858 - 1865
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$0
12/58 12/59 12/60 12/61 12/62 12/63 12/64 12/65
PERIOD END
T OT AL CURRENT ASSET S T OT AL NONCURRENT ASSET S
Noncurrent assets grew faster than current assets in every period; noncurrent assets
increased every period in absolute terms, even when total assets shrank.
i
Current assets = cash + loan portfolio – suspended debt. Suspended debt,
government indebtedness, real estate, and miscellaneous assets are treated as noncurrent
220
As stated in Appendix II, events in the banks were chiefly driven by changes in
their loan portfolios. This holds true regarding overall bank liquidity, which was
impacted by the growth in suspended debt. Banks reported suspended debt as part of
their loan portfolios, but to the extent these loans were not collectable, at least any time
soon, they contributed to the banks’ illiquidity. Suspended debt as a percentage of total
assets doubled from December 1858 to December 1860 from 0.7% to 1.4%. Really
drastic increases, though, began in December 1861 when suspended debt hit 6.6% of total
assets. After this reporting there were generally large increases in suspended debt as a
percent of total assets to December 1863, when suspended debt peaked at 12.0% of
assets. This decreased to 11.4% in December 1864, and to 8.9% in December 1865, still
six times the December 1860 measure. Even following the divestiture of their branches,
SUSP DEBT:TOTAL ASSETS the reorganized parent banks

OVERVIEW: 1858 - 1865
15% 11.8% 12.0% 11.4%
were still saddled with a huge
8.9%
10%
6.6% burden of nonperforming debt.
5%
0.7% 1.2% 1.4%
1863 through 1865 was the
0%
12/58 12/59 12/60 12/61 12/62 12/63 12/64 12/65
period when the bulk of the
PERIOD END
promissory notes were being
litigated, so there would have been some recovery of assets and reduction in the
suspended debt account. This however, does not show up in increased cash, note
holdings or assets other than real estate – a noncurrent asset of doubtful value, given the
assets.
221
war. Exactly how much money the banks ultimately lost on their loans cannot be
determined, in the absence of a complete set of books or financial statements. The
suspended debt category is best interpreted as a reserve against potential loss. Even if the
banks were able to recover their capital from defaulted borrowers through the sale of their
real estate, it was a long drawn-out process.
The decreasing share of current assets as a percentage of total assets reduced net
working capital, which is current assets minus current liabilities. Working capital is the
NET WORKING CAPITAL money immediately available
OVERVIEW: 1858 - 1865
$10,000,000
for the day-to-day operations of
$8,000,000
$6,000,000 a business; insufficient
$4,000,000
$2,000,000
$0 working capital kills a business
12/58 12/59 12/60 12/61 12/62 12/63 12/64 12/65
PERIOD END as surely as oxygen deprivation
kills a man. Net working capital increased throughout the prewar period, from about
$4.8m in December 1858 to about $9.2m in December 1860. After that, during the war,
working capital declined every

NWC TO CURRENT ASSETS
OVERVIEW: 1858 - 1865
period except for a very small
50% 42.1% 41.4%
37.9% 37.0%
40% 31.8% 31.1% 32.1% increase in December 1864. By
30% 18.7%
20%
10%
December 1865 working capital
0%
12/58 12/59 12/60 12/61 12/62 12/63 12/64 12/65 was down to $2.7m. On a
PERIOD END
percentage basis, declines were
generally of increasing magnitude as time went on, culminating in a 48% drop in
222
December 1865 from the previous period. The ratio of working capital to total assets
shows that even as the banks’ total assets shrank, working capital was declining still
faster. Even after they had weathered the crisis of 1861 the banks were not out of the
woods.
The cash ratio measures the relationship of cash to current liabilities, and is
considered a very stringent test of financial liquidity. For example, in the graph below in
December 1858, for every dollar of current liabilities the banks had forty-eight cents in
cash. The cash ratio was

CASH RATIO
OVERVIEW: 1858 - 1865
generally higher during the war
0.8 0.64 0.63 0.61
0.6 0.48
0.41 0.42
0.54
0.41
than during the salad days of
0.4
0.2 the late 1850s. During the
0
12/58 12/59 12/60 12/61 12/62 12/63 12/64 12/65 prewar period from December
PERIOD END
1858 to December 1860 the
cash ratio fluctuated between 0.41 and 0.52. From 1861 to 1863 the cash ratio rose,
topping at 0.76 in June 1862 before declining again. The cash ratio did not decline to
prewar levels until December 1864 and December 1865, when it reaches 0.54 and 0.40
respectively. This bears some explaining.
By late 1862 the federal war machine was pumping greenbacks into Missouri in
payment for military contracts. From that date, greenbacks quickly replaced state
banknotes in circulation (which the banks had largely withdrawn and destroyed), and
specie (which was being hoarded or taken out of state). Whether the situation illustrates
223
Gresham’s Law, that bad money drives out good, is an open question. Still, the new
money kept the banks cash rich, relative to their reduced size. The St. Louis Missouri
Republican in this period commented that money was available, but found little
employment. Furthermore, financial institutions frequently respond to periods of crisis or
uncertainty by reducing outstanding financial obligations. The high cash ratio shows that
the bankers anticipated, and were prepared for, the worst.
The denominator of the cash-ratio equation, current liabilities, consisted of
deposits, circulation, and due to other banks. The bankers themselves, rather than the
public, directly controlled the latter two. After the outbreak of hostilities in 1861, the
banks reduced their outstanding circulation every period for the duration of the war. Due
to other banks was way down after December 1861. Deposits dropped sharply in
December 1861, but rebounded in June 1862 and December 1862. From 1863 to 1865
deposits reached their highest levels for the entire period under study. The bankers
braced for a storm, even though depositor confidence recovered somewhat after the panic
of October 1861. The banks gradually relaxed after December 1862, as shown by the
decline in the cash ratio.
224
Leverage
Financial leverage is the extent to which a firm employs debt in its capital
structure, and is most commonly measured by the debt to equity (D/E) ratio. ii During the
prewar period the banking industry’s average D/E ratio exceeded 1.0, which is to say, the
banks had more debt than equity in their capital structure. The ratio trended downward,
however, from a high of 1.82 in December 1858 to 1.03 in December 1860. So, for every
dollar of equity invested in the banks in December 1860, there was $1.03 in debt. Over
the next two years the D/E ratio declined further, bottoming out at 0.58 in December
1862. By December 1863 the ratio had increased to 0.62, and reached 0.76 in December
1865.
The banks were thus less encumbered by debt during the war than they were
previously. In times of great uncertainty, such as financial panic or war, debt markets
DEBT-EQUITY RATIO
tend to clear. Lenders withdraw
OVERVIEW: 1858 - 1865
2
1.82 their capital because they are
1.5 1.27
1.03
1 0.77
0.58 0.62 0.64 0.76 uncertain about the ability of
0.5
0 borrowers to repay; borrowers
12/58 12/59 12/60 12/61 12/62 12/63 12/64 12/65
PERIOD END reduce their obligations for the
same reason. If anything, in such times it is better to be a borrower than a lender, though
the tendency is for lenders to take their money and run. The Missouri Banking Act of
225
1857 had been passed into law just as the great panic of that year was gathering
momentum, and the newly-chartered Missouri banks were being organized while the
panic was at its height. With the memories of 1857 still fresh, the bankers responded
quickly and effectively to the crisis in 1861.
Total equity and total liabilities both increased during the prewar period. By June
1861 total equity reached its peak for the entire period under study at $11m. Equity
remained almost exactly at this level through December 1862; no new issues of stock
were sold, and profits were negligible. On the other side of the balance sheet, bank
liabilities likewise trended consistently up in the prewar period. Liabilities peaked in
December 1860, and remained more or less steady through June 1861. Then for the next
year and a half the trend was straight down, with the largest single drop in entire period
under study in December 1861, down over $2m to about $8.3m. By December 1862
liabilities had settled at a new equilibrium just over $6m, and remained at this level for
the remainder of the war.
Since equity was flat in the 1860 – 1862 period, the drastic decline in the D/E
ratio owed to changes in the level of debt. The banks’ debt, consisting of deposits,
circulation, and due to other banks, has been discussed above. From 1863 to the end of
the war, when the D/E ratio was increasing, this was owing to the decrease in equity
holdings, rather than in the increase of debt.
ii
Debt-equity ratio = total debt/total equity.
226
After December 1862 liabilities stabilized at just over $6m. Meanwhile, though
circulation continued to be reduced in every reporting period for the remainder of the
TOTAL EQUITY TO TOTAL LIABILITIES

OVERVIEW: 1858 - 1865
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$0
12/58 12/59 12/60 12/61 12/62 12/63 12/64 12/65
PERIOD END
T OT AL EQUIT Y T OT AL SUMMED LIABILIT IES
war, deposits and due other banks increased. This would seem to indicate a return of
confidence in the banking community itself (due other banks), and on the part of the
public (deposits). But now the shoe was on the other foot; it was equity’s turn to decline.
After 1862 equity dropped consistently through the remainder of the war years,
decreasing slightly to about $10.5m in December 1863, then sank more sharply in
December 1864 and December 1865. By the latter year the banks’ total equity was at the
lowest level since June 1859. Equity had failed to grow because no new equity had been
227
sold in all this period, and profits were flat. What shrank the total in 1864 and 1865 was
the closure or divestiture of the branches.
A quarter-to-quarter comparison of total equity to total liabilities in the 1860 –
1862 period shows very slight gains in equity in June 1861 and June 1862. This must
reflect increases in retained earnings, since there were no new equity sales. Liabilities,
however, decrease throughout this period, with the biggest drop in December 1861, by
more than 20%. Liabilities increase slightly December 1863 and December 1865, but
equity decreases every period after June 1862. Despite minor fluctuations equity remains
quite stable overall, varying between about $10.2m and $11m for the entire period. This
is as expected: equity changes only slowly, but liabilities can be much more volatile.
Creditors were in a position to reduce their exposure to the banks, and did so. Owners
were trapped. The biggest single drop in liabilities is September 1861 (from about $11m
to about $7m, about 35%). As with many other measures, this indicates a crisis occurring
in 3rd quarter 1861. Liabilities rebounded briefly in December 1861, to about $8.3m, and
are then down again for the remainder of the 1861 – 1862 period.
To summarize, all indicators show a decreasing use of debt throughout the prewar
period and until December 1862, when the level of debt relative to equity starts to
increase. This, however, results from declining equity, rather than increasing liabilities.
Profitability
228
In nominal dollars, Missouri banks’ earned surplus iii was positive every year in
the period under study except in December 1865. In the absence of any financial
NET INCOME reporting, it cannot be

OVERVIEW: 1858 - 1865
$1,500,000
determined if the reduction in
$1,000,000
$500,000 earned surplus in 1865 owed

$0
to an operating loss, or to the
12/58 12/59 12/60 12/61 12/62 12/63 12/64 12/65
($500,000)
PERIOD END closure or divestiture of the
banks branches. The banks’ ‘profits’ during the war years probably deceived no one;
investors were well aware of the pernicious effects of inflation, and the wartime rise in
prices was excoriated in the St. Louis papers. 1 Be that as it may, nominal profits
increased each year in the prewar period to a high in December 1860 of $1.1m. On a
percentage change basis, net income increased 27% in December 1859 from the previous
period, and increased another 57% in December 1860. By December 1861 profits had
dropped by over 40%, to about $650 thousand. By December 1862 profits were down to
about $300 thousand, a drop of over 50%. Profits strengthened somewhat in December
1863, but by December 1864 were down to the lowest level yet for the period under
study. In December 1865 the banks’ total retained earnings decreased by about $150
thousand from the previous year.
iii
The 19th-century term for retained earnings.
229
The banks’ nominal return on assets iv peaked in December 1860 at 5.0% and
declined after that. In the middle years of the war, from December 1862 to December
RETURN ON ASSETS RATIO 1864, ROA remained in the 1-

OVERVIEW: 1858 - 1865
5.0%
2% range. Banks achieved
6%
3.6% 3.5% 3.4%
4%
1.7% 2.3%
1.6%
their highest return on equity
2%
0% (ROE) v in December 1858,
-2% 12/58 12/59 12/60 12/61 12/62 12/63 12/64 12/65
-0.9%
PERIOD END 10.5%, but almost matched
this in December 1860 with 10.2%. After that ROE declined to between 2.5 and 3.5%
from 1862 to 1864.
As stated in the introduction, two important factors complicate the interpretation
of the banks’ profitability, namely, the wartime inflation, and the effect of the war on the
market value of bank assets. Bankers are commonly viewed as parasites feasting on the
RETURN ON EQUITY RATIO
flesh of the common man, but
OVERVIEW: 1858 - 1865
15%
the banks’ real, inflation-
10.5% 10.2%
10% 7.9%
6.0%
2.6% 3.5% 2.7%
adjusted ROA and ROE were
5%
0%
quite low. Inflation-adjusted
-5% 12/58 12/59 12/60 12/61 12/62 12/63 12/64 -1.6%
12/65
PERIOD END ROA was consistently between
3.5%–5.5% from December 1858 to December 1861. 2 After that, even though the banks
remained profitable in nominal dollars, real ROA and ROE were double-digit negative,
iv
Return on assets = net income/total assets.
v
Return on equity = net income/total equity.
230
and increasingly so in the December 1862 to December 1864 period. Inflation-adjusted

INFLATION-ADJUSTED RETURN ON ASSETS
ROE is similar to the inflation-
OVERVIEW: 1858 - 1865
10% 3.6% 3.5% 5.0% 5.5% adjusted ROA scenario. The

0.8%
0%
12/58 12/59 12/60 12/61 12/62 12/63 12/64 12/65 inflation-adjusted ROE is
-10%
-10.2%
-20% -15.9% consistently positive between
-30% -24.6%
PERIOD END December 1858 and December
1861, in the 8 – 10.5% range. From 1862 to 1864 real inflation-adjusted ROE was
increasingly negative, and flat in 1865.
Besides inflation, another factor affecting the banks’ performance that was
concealed by their published financial statements was the decreased market value of their
asset holdings, particularly real estate. There was no requirement under the accounting
INFLATION ADJUSTED RETURN ON EQUITY practices of the day that asset

OVERVIEW: 1858 - 1865
values in financial statements
20% 10.5% 7.9% 10.2% 8.2%
10% 0.1% be written down to market
0%
-10% 12/58 12/59 12/60 12/61 12/62 12/63 12/64 12/65
-20% -9.4%
-14.9%
price; indeed, accepted practice
-30% -23.8%
PERIOD END at the time was that market
prices were ephemeral and unreliable, whereas historical cost was a known fact. Real
estate was most likely carried at some putative prewar value – original sale price, or the
valuation at the time the loan was made. Real estate was, of course, itself of doubtful
value in war-torn Missouri.
231
A second issue regarding asset valuation was the market price of the banks’ stock.
The banks carried their outstanding stock on their financial statements at book value, one
hundred dollars a share, throughout the war. However, the market price of the stock
decreased drastically as the war went on. Trading in Missouri bank shares was very thin
during the war years, but for the few trades that did take place prices were consistently
between fifty and sixty percent of book value. In the immediate prewar period, bank
stock had sold at a premium over book. By 1862 – 3 bank shareholders saw the total
value of their holdings drop by more than half. All calculations of profitability as a
percent of equity are suspect, because the equity figure used in the calculation is book
value, rather than market. Market-price data is too scanty to compute other measures of
profitability, such as P/E ratio, dividend- or capital gains yield.
Comparing total assets and total equity for the period 1858 to 1865, the prewar
period shows continuous growth in total assets, to a high in December 1860 of about
$22m. This stays steady in June 1861 but then declines by December 1861 to about
$19m. Total assets decline each period after that, to a low in December 1865 of about
$14m. Equity grew consistently all through the prewar period and remained steady
through June 1862, or eighteen months longer than total assets. Declines in equity were
much less sharp than in total assets, indicating that most of the decline in the banks’
assets was at the expense of liabilities. Marking to market would have shown a much
more rapid decline in total assets.
232
Conclusion: Missouri Banks From the Perspective of Modern Banking Practice
In 1861 the Missouri bankers voluntarily underwrote the southern cause, but very
quickly they and their institutions were caught up in events beyond their control. These
were financial as well as well as political. The banks were drained of cash, their funds
were sequestered, their loans went bad, and the economic basis for their business was
TOTAL ASSETS AND TOTAL EQUITY

OVERVIEW: 1858 - 1865
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$0
12/58 12/59 12/60 12/61 12/62 12/63 12/64 12/65
PERIOD END
T OT AL SUMMED ASSET S T OT AL EQUIT Y
destroyed. The human cost was even higher. Pro-southern bankers were shot, arrested,
exiled, and went into hiding. Their customers had been destroyed as an economic class.
In spite of all this, the Farmers Bank of Missouri and the Union Bank of St. Louis were
the only two of the nine state-chartered banks forced to close. The reason for this
surprising resiliency was in the conservative capital structure of the banks.
233
Comparisons with Contemporary Banks
Comparing these banks to contemporary banks is problematic, because of changes
in the business. Cash in contemporary banks is largely invested in highly liquid, short-
term interest-bearing securities. Banknote circulation, an important part of the banks’
business in 1861, is gone entirely. There is also the size of the banks to consider: There
were only nine banks in the state, and they were small in relation to the total economy,
compared to banks today. Without a complete set of financial statements for the
Missouri banks of 1858 through 1865, only a limited number of comparisons are
possible. Moreover, since the banks had only been chartered in 1858 they were too new
in the first couple of years of operations to form a basis for comparison to a mature
industry. By December 1860 they were as settled as they were ever to be, and this year is
taken as the basis of comparison to the 1990 – 8 data. Liquidity is difficult to compare,
as near-cash substitutes have proliferated in the last half-century. Profitability, leverage,
and bad debt may be compared more readily:
1990 – 1998 December December December

Missouri Banks Average 3 1860 1862 1865
Return on Assets vi 1.3% 5.0% 1.7% ( 0.9%)
Return on Equityviii 15.0% 10.2% 2.6% ( 1.6%)
Loan portfolio
(% of assets) 56.5% 67.8% 58.0% 48.3%
Loss Allowance
(% of portfolio) 1.6% 2.1% 14.6% 18.5%
vi
Not adjusted for inflation.
234
Equity Capital
(% of assets) 8.4% 43.0% 63.1% 56.8%
The Civil-War banks differ most strikingly from contemporary banks in the
extremely high proportion of suspended debt, and the low degree of financial leverage.
Suspended debt has been discussed above. Financial leverage is a measure of both
willingness to assume risk, and of confidence in the future. Modern banks are both more
willing to assume risk and more confidence in the future than their earlier counterparts–in
large part, probably, because of the safety net extended by the federal government.
Missouri banks’ mean equity capital from 1990 through 1998 was only 8.4% of total
assets, compared to 43% in 1860. This is by no means a merely theoretical consideration,
as shown in the following example. Consider a company with $8 million in total assets,
able to borrow money at 10% interest per year. The company is evaluating two
alternative capital structures, unleveraged with no debt, and leveraged by $6 million in
debt, for its total capitalization. Under three possible scenarios, recession, expected, and
boom:
A. Unleveraged Capital Structure: Equity = $8m; Debt = 0

Scenario 1. Recession 2. Expected 3. Expansion
EBIT vii $500,000 $1,000,000 $1,500,000
Interest Expense $ 0 $ 0 $ 0
Net Income $500,000 $1,000,000 $1,500,000
ROE 6.25% 12.50% 18.75%
B. Leveraged Capital Structure: Equity = $2m; Debt = $6m
vii
Earnings before interest and taxes.
235
Scenario 1. Recession 2. Expected 3. Expansion

EBIT $500,000 $1,000,000 $1,500,000
Interest Expense $600,000 $ 600,000 $ 600,000
Net Income ($100,000) $ 400,000 $ 900,000
ROE (5.00%) 20.00% 45.00%
Under scenarios two and three, the leveraged capital structure earns a much
higher return on equity than the unleveraged alternative. However, under the recession
scenario, the fixed interest payments on the debt push the leveraged structure push the
company into loss. In good times, investors can magnify their return on investment by
the employment of debt capital. However, in bad times, the debt load of a leveraged
company can bankrupt the firm. In this case, the unleveraged alternative is far better:
Even in the recession scenario shown above, the unleveraged capital structure earns the
company a 6.25% return on investment, at the same time as the leveraged structure loses
5% of its total equity.
The Civil War in Missouri was the recession scenario, in spades. If the banks of
the day had carried as much debt as their modern counterparts they could not have
survived. Still, throughout the war the banks’ survival was never certain, and two of the
nine banks did go under. When they could, creditors took their money and ran. The
banks, though still solvent, were of little use as financial intermediaries to the civilian
economy owing to their illiquidity. Missouri banks were a disastrous investment to be
stuck in during the war years. The only reason the banks survived at all was owing to
their conservative capital structure, and because their stockholders were small consortia
236
of rich men who were trapped in their investments and unable to sell. As bad as these
investments were on a historical-cost basis, valuing their assets and share prices on a
mark-to-market basis, they were even worse. That the surviving banks eventually
recovered and reorganized as national banks was only partial compensation and only for
those investors who remained in for the long term; the average annualized return on
investment would have been very low. Owing to the huge amount of real property the
banks wound up holding by the end of the war, they were unwitting agents of social
change. The fact that the banks earned little or no profit on this process probably made
little difference in how Missouri’s southern men felt about the banks by war’s end.
In 1861 the bankers were overwhelmingly pro-southern. As the war progressed
the southern men were pushed out, leaving the northern men dominant for the first time.
Even though their investments were much reduced by the war, most of the remaining
owners could afford to wait. Much more than today stock ownership was a rich man’s
game. However little these people may have liked it, they were able to carry their losses
until the war was over and the banks broken up and reorganized. A wrecked car sitting in
your backyard may cost you nothing, except in the estimation of your neighbors. But
even if someone buys the wreck five years later and you recoup some of your original
cost, this is not everyone’s idea of a good investment. This is the situation in which
Missouri bankers found themselves.
There were some real beneficiaries, however, to this unhappy situation: new
shareholders. Any investor purchasing bank shares at the depressed prices of 1862 or
237
1863 realized a good return at war’s end, though no one could predict this at the time.
Once the price of bank shares and the value of the banks’ principal asset – real estate –
recovered, they operated as a one-way ratchet for the creation of new wealth at the
expense of old.
238
CHAPTER NOTES
1
Ref. for example, St. Louis Missouri Republican, 2/10/1864, 1-4: “[T]he supply of
currency is becoming more abundant, and stock operators are freely supplied with all
they require, on more liberal terms than at any period since last August. The conviction
with every one is that Mr. Chase will issue, as rapidly as they can be printed all the paper
money issues authorized by acts of Congress, and, furthermore, that the honorable
secretary and his shoddy satellites will bring into play all the power and influence of
Government to organize quickly the national banks, with [illeg.] of banking capital, and
$300 million of bank note circulation. The total paper currency authorized by acts of
Congress and State laws will then total over $1 billion.” The paper goes on to
editorialize about the inflationary effects of this currency issue, and the effects on the
price of gold.
2
Inflation-adjusted return on assets and inflation-adjusted return on equity were
calculated using the Fisher equation:
1+R = (1+r)(1+h)
Where:
R = nominal rate of return
r = real rate of return
h = rate of inflation
Source: Ross, Stephen A., Randolph W. Westerfield and Bradford D. Jordan, Essentials
of Corporate Finance, Second Edition, Boston, Irwin McGraw-Hill, 1999, p. 168 – 9.
General price index numbers were taken from Sharkey, Robert P., “Money, Class, and
Party: An Economic Study of Civil War and Reconstruction,” The Johns Hopkins
University Studies in Historical and Political Science, Series LXXVII, Number 2 (1959),
p. 240. Figures quoted from Snyder, Carl, Historical Statistics of the United States,
Series L 1, pp. 231 – 233.
3
Average for national banks chartered in Missouri, 1990 – 1998. Source:
Missouri Division of Finance, Jefferson City, Missouri, using data compiled by the FDIC.
239
BIBLIOGRAPHY
PRIMARY SOURCES
Archival Sources
Missouri Historical Society–St. Louis, Missouri.
St. Louis Commercial Library–University of Missouri–St. Louis.
Western Manuscripts Collection–University of Missouri–Columbia: Missouri.
Western Manuscripts Collection–University of Missouri–St. Louis, Missouri.
Printed Sources – Government
Kennedy. C. G. Agriculture of the United States in 1860,Compiled from the

Original Returns of the 8th Census Under the Direction of the Secretary of the
Interior. Washington, D. C.: Government Printing Office, 1864.
Laws of the State of Missouri Passed at the Regular Session of the 21st General
Assembly, Begun and Held at the City of Jefferson, On Monday, December 31,
1860. Jefferson City: W. G. Cheeney, Public Printer, 1861.
Laws of the State of Missouri Passed at the Regular Session of the 22nd General
Assembly, Begun and Held at the City of Jefferson, On Monday, December 29,
1862. Jefferson City: J. P. Ament, Public Printer, 1863.
Laws of the State of Missouri Passed at the Adjourned Session of the 22nd
General Assembly, Begun and Held at the City of Jefferson, On Tuesday.
November 10, 1863. Jefferson City: W. A. Curry, Public Printer, 1864.
Laws of the State of Missouri Passed at the Regular Session of the 23rd General
Assembly. Begun and Held at the City of Jefferson. On Monday. December 6,
1864, Jefferson City: W. A. Curry, Public Printer, 1865.
Laws of the State of Missouri Passed at the Adjourned Session of the 23rd
General Assembly, Begun and Held at the City of Jefferson, On Wednesday.
November 1, 1865. Jefferson City: Emory S. Foster, Public Printer, 1866.
240
BIBLIOGRAPHY
Bank Commissioners. Journal of the Missouri State Legislature, 1857 session,
Jefferson City: 1857.
The War of the Rebellion: A Compilation of the Official Records of the Union and
Confederate Armies, Published Under the Direction of the United States’
Secretary of War. Washington, D.C.: United States Government Printing Office,
1880–1901.
U. S. Census manuscript records for Missouri, 1850–1870 (microfilm).
U. S. and Confederate military service records, 1861–1865 (microfilm).
Printed Sources–Newspapers
Boonville Weekly Observer. Boonville. Missouri, 1855–1861.
Columbia Missouri Statesman. Columbia. Missouri, 1855–1865.
Liberty Tribune. Liberty. Missouri, 1855–1865.
Morrison-Fuller, Berenice. “Plantation Life in Missouri.” Glasgow Missourian.

6/2, 6/9, 6/23, 6/30. 7/7/1938.
St. Louis Missouri Democrat. St. Louis, Missouri, 1855–1865.
St. Louis Missouri Republican. St. Louis, Missouri, 1855–1865
Printed Sources–Other
Ball, Douglas B., et al., cat. The Dr. Joseph Vacca Collection of Missouri
Currency, et al. Munson (NY): NASCA (Numismatic and Antiquarian Service
Corporation of America), 1981.
Banker’s Magazine, 1860–1865.
Chitty, Joseph. and John Walter Hulme. A Practical Treatise on Bills of

Exchange, Checks on Bankers, Promissory Notes, Bankers’ Cash Notes, and Bank
Notes, with Reference to the Law of Scotland, France, and America. 12th
241
BIBLIOGRAPHY
American edition from the 9th London edition. Springfield (MA): Merriam,
1854.
McGrath, Michael K. State Almanac and Official Directory of Missouri. St.

Louis: John J. Daly & Company, 1878 – 1888 editions.
Missouri State Gazetteer, 1859–1860. St. Louis: Sutherland & McEvoy, 1860.
Parker, Nathan H. Missouri as it is in 1867. Philadelphia: J. B. Lippencott &

Company, 1867.
Twain, Mark. Life on the Mississippi. New York: Oxford University Press, 1996.
Watts, Hamp B. The Babe of the Company. Fayette (Missouri): Democrat-

Leader Press, 1913.
SECONDARY SOURCES
History–Finance
Barrett, Don C. The Greenbacks and the Resumption of Specie Payments, 1862 –
1879. Cambridge: Harvard University Press, 1931.
Brown, John Crosby. A Hundred Years of Merchant Banking. New York: private
printing, 1909.
Chitty, Joseph. and John Walter Hulme. A Practical Treatise on Bills of

Exchange. Checks on Bankers. Promissory Notes. Bankers’ Cash Notes. and
Bank Notes. with Reference to the Law of Scotland. France. and America. 12th
American edition from the 9th London edition. Springfield (MA): Merriam,
1854.
Chandler, Lester V. The Economics of Money and Banking. New York: Harper,
1948.
Conant, Charles A. A History of Modern Banks of Issue. New York: G. P.

Putnam’s Sons, 1902.
Dewey, Davis R. Financial History of the United States. New York: Longmans,
Green & Company, 1939.
242
BIBLIOGRAPHY
. State Banking Before the Civil War. Washington, D. C.: National

Monetary Commission, 1910.
Dillistin, William. Bank Note Reporters and Counterfeit Detectors, 1826–1866.

New York: American Numismatic Society, 1949.
Hammond, Bray. Banks and Politics in America: From the Revolution to the
Civil War. Princeton: Princeton University Press, 1957.
. Sovereignty and an Empty Purse: Banks and Politics in the Civil

War. Princeton: Princeton University Press, 1970.
Hepburn, A. Barton. A History of Currency in the United States. New York:

Augustus M. Kelley, 1967 (reprint of the revised and enlarged edition, 1924).
Historical Statistics of the United States. 1789 – 1945: A Supplement to the

Statistical Abstract of the United States. Washington, D.C.: United States
Department of Commerce, 1949.
Homer, Sidney and Richard Sylla. A History of Interest Rates. New Brunswick
(NJ): Rutgers University Press, 1996.
Knox, J. J. History of Banking in the United States. New York: Bradford Rhodes
& Company, 1903.
Larson, Henrietta M. Jay Cooke: Private Banker. Cambridge: Harvard

University Press, 1936.
McFaul, John M. The Politics of Jacksonian Finance. Ithaca: Cornell University

Press, 1972.
Miller, Roger LeRoy and David D. Van Hoose. Essentials of Money, Banking
and Financial Markets. New York: Addison Wesley Longman Inc., 1997.
Mitchell, Wesley C. Gold, Prices and Wages Under the Greenback Standard.
New York: Augustus M. Kelley, 1996 (reprint of 1908 edition).
Myers, Margaret G. A Financial History of the United States. New York:

Columbia University Press, 1970.
243
BIBLIOGRAPHY
Sharkey, Robert P. “Money, Class, and Party: An Economic Study of Civil War
and Reconstruction.” Johns Hopkins University Studies in Historical and
Political Science LXXVII, Number 2 (1959).
Studenski, Paul and Herman F. Krooss. Financial History of the United States.
New York: McGraw-Hill, 1963.
Timberlake, Richard H. Monetary Policy in the United States. Chicago:

University of Chicago Press, 1993.
Unger, Irwin. The Greenback Era: A Social and Political History of American
Finance, 1865 – 1879. Princeton: Princeton University Press, 1964.
History – Accounting
Brief, Richard P. Nineteenth Century Capital Accounting and Business

Investment. New York: Arno Press, 1976.
Chatfield, Michael and Richard Vangermeersch. eds. The History of Accounting:

An International Encyclopedia. New York: Garland Publishing, Inc., 1996.
Chatfield, Michael. A History of Accounting Thought. Revised Edition.

Huntington (NY): Robert E. Krieger Publishing Company, 1977.
Edwards, J. R., ed. Studies of Company Records 1830 – 1974. New York:
Garland Publishing, Inc., 1984.
Feldmann, John Howard. The Income Statement – Past, Present, Future.

Unpublished M. A. Thesis. Columbia: University of Missouri, 1947.
A History of the CPA Profession in Missouri. St. Louis: Missouri Society of

Certified Public Accountants, 1983.
Johnson, H. Thomas and Robert S. Kaplan. Relevance Lost: The Rise and Fall of
Management Accounting. Boston: Harvard Business School Press, 1991.
Lee, T. A., ed. The Evolution of Audit Thought and Practice. New York:
Garland Publishing Inc., 1988.
Parker, R. H. Management Accounting: An Historical Perspective. London:

Macmillan and Co., Ltd., 1969.
244
BIBLIOGRAPHY
Previts, Gary John and Barbara Dubis Merino. A History of Accountancy in the
United States: The Cultural Significance of Accounting. Columbus: Ohio State
Schackne, Stewart. Designers of Order: The Story of Accountancy Briefly Told.

New York: American Institute of Certified Public Accountants, 1970.
Ten Have, Dr. O. The History of Accountancy. 2nd Edition. Palo Alto: Bay
Books, 1986.
Yamey, Basil S., ed. The Historical Development of Accounting: A Selection of

Papers. New York: Arno Press, 1978.
History–U.S.
Biographical Directory of the American Congress. 1771-1971. Washington. D.

C.: United States Printing Office, 1971.
Browning, James A. Violence was no Stranger: A Guide to the Gravesites of

Famous Westerners. Stillwater (OK): Barbed Wire Press, 1993.
Davis, Jefferson. The Rise and Fall of the Confederate Government. New York:
D. Appleton and Company, 1912.
Faragher, John Mack. Sugar Creek: Life on the Illinois Prairie. New Haven:
Yale University Press, 1986.
McPherson, James M. Battle Cry of Freedom: The Civil War Era. New York:
Oxford University Press, 1988.
Stone, Wilbur Fiske, ed. History of Colorado. Chicago: S. J. Clarke, 1918–1919

[sic.], 1927 [MSHS index].
Tefertiller, Casey. Wyatt Earp: The Life Behind the Legend. New York: John
Wiley & Sons. Inc., 1997.
Thrapp, Daniel. Encyclopedia of Frontier Biography. Glendale (CA): Arthur H.

Clark Company, 1988.
245
BIBLIOGRAPHY
United States Biographical Dictionary and Portrait Gallery of Eminent and Self-
Made Men. Missouri Volume. New York: United States Biographical Publishing
Company, 1878.
Wellman, Paul I. A Dynasty of Western Outlaws. Lincoln: University of

Nebraska Press, 1986.
History–Missouri (General)
Atherton, Lewis E. The Pioneer Merchant in Mid-America. Columbia:

University of Missouri Studies. Volume XIV. Number 1 (January 1, 1939). pp.
1-127.
Bartels, Caroline. The Civil War in Missouri Day by Day: 1861 – 1865.
Shawnee Mission (KS): Two Trails Publishing Company, 1992.
The Bench and Bar of St. Louis, Kansas City, Jefferson City, and other Missouri
Cities. St. Louis: American Biographical Publishing Company, 1884.
Bloch, E. Maurice. The Paintings of George Caleb Bingham: A Catalog

Raissonne’. Columbia: University of Missouri Press, 1986.
Bryan, William S. and Robert Rose. Pioneer Families of Missouri. St. Louis:
Bryan, Brand & Company, 1876.
Cable. John R. The Bank of the State of Missouri. New York: Columbia
Castel, Albert and Thomas Goodrich. Bloody Bill Anderson: The Short. Savage
Life of a Civil War Guerrilla. Mechanicsburg (PA): Stackpole Books, 1998.
Castel, Albert. General Sterling Price and the Civil War in the West. Baton
Rouge: Louisiana State University Press, 1968.
Christensen, Lawrence O. and Gary R. Kremer. History of Missouri. Volume IV,

1875 – 1919. Columbia: University of Missouri Press, 1997.
Conrad, Howard L. Encyclopedia of the History of Missouri. New York:

Southern History Company, 1901.
246
BIBLIOGRAPHY
Davis, Walter Bickford and Daniel S. Durrie. Illustrated History of Missouri. St.
Louis: A. S. Hall & Company, 1876.
Eakin, Joanne C. and Donald R. Hale. Branded as Rebels. Independence: Wee

Print, 1993.
Farmer, Phillip S. United States Marshals of the Western District of Missouri.

Privately published, 1987.
Fellman, Michael. Inside War: The Guerrilla Conflict in Missouri During the
American Civil War. New York: Oxford University Press, 1989.
Gentry, North Todd. Bench and Bar of Boone County. Columbia: privately
published, 1916.
Hardy, Richard J., Richard R. Dohm and David A. Leuthold, Eds. Missouri
Government and Politics. Columbia (MO): University of Missouri Press, 1995.
History and Descriptive Review of Missouri. Kansas City: John Lethem, 1891.
Hubbard, Timothy W. and Lewis E. Davids. Banking in Mid-America: A History

of Missouri Banks. Washington, D.C.: Public Affairs Press, 1969.
Hurt, R. Douglas. Agriculture and Slavery in Missouri’s Little Dixie. Columbia:

University of Missouri Press, 1992.
Jackson, William Rufus. Missouri Democracy: A History of the Party and its
Representative Members, Past and Present. St. Louis: S. J. Clarke Publishing
Co., Inc., 1935.
Krauthoff, Louis Charles. “The Supreme Court of Missouri.” Boston: The Green
Bag. April 1891. pp. 157 – 90.
McCandless. Perry. History of Missouri. Volume II: 1820–1860. Columbia:

University of Missouri Press.
Messages and Proclamations of the Governors of the State of Missouri.

Columbia: State Historical Society of Missouri, 1922.
Missouri Baptist Biography. Liberty (MO): Missouri Baptist Historical

Association, 1914.
247
BIBLIOGRAPHY
Missouri Biographical Dictionary: People of All Times and Places who have been
Important in the Life of the State. New York: Somerset Press, 1995.
O’Flaherty, Daniel. General Jo Shelby–Undefeated Rebel. Chapel Hill:

University of North Carolina Press, 1954.
Parrish, William E. History of Missouri. Volume III: 1860–1875. Columbia:

University of Missouri Press, 1973.
. Turbulent Partnership: Missouri and the Union, 1861–1865.

Columbia: University of Missouri Press, 1963.
Past and Present Membership of the Missouri Supreme Court. Kirksville (MO):
Northeast Missouri State College, 1968.
Phillips, Christopher. Missouri’s Confederate: Claiborne Fox Jackson and the

Creation of Southern Identity in the Border West. Columbia: University of
Missouri Press. 2000.
Primm, James M. Economic Policy in the Development of a Western State,

Missouri 1820–1860. Cambridge: Harvard University Press, 1954.
Shoemaker, Floyd C. Missouri and Missourians. Chicago: Lewis Publishing

Company, 1943.
. ed. Missouri Day by Day. Columbia: Missouri State Historical

Society, 1942–3.
. Missouri’s Hall of Fame: Lives of Eminent Missourians. Columbia:

Missouri Book Company, 1918.
Stephens, Walter B. Centennial History of Missouri (The Center State). One

Hundred Years in the Union. Chicago: S. J. Clarke Publishing Company, 1921.
Stewart, A. J. D., ed. History of the Bench and Bar of Missouri. St. Louis: Legal
Publishing Company, 1989, p. 356–7.
Tasher, Lucy Lucille. The Missouri Democrat and the Civil War. Chicago:
University of Chicago Libraries (private edition), 1936.
248
BIBLIOGRAPHY
United Daughters of the Confederacy, Missouri Division. Reminiscences of the

Women of Missouri During the Sixties. Jefferson City: Hugh Stephens Publishing
Company, 1922.
Williams, Walter. and Floyd C. Shoemaker. Missouri Mother of the West.

Chicago: American Historical Society, Inc., 1930.
Woodward, William S. Annals of Methodism in Missouri. Columbia (Missouri):

E. W. Stephens, Publisher, 1893.
History–Missouri (Journals)
Adler, Jeffrey S. “Yankee Colonizers and the Making of Antebellum St. Louis.”
Gateway Heritage 12, Number 3 (Winter 1992): p. 5.
Atherton, Lewis C. “James and Robert Aull: Pioneer Merchants in Western

Missouri.” Missouri Historical Review 30, Number 3 (October 1935). p. 3-27.
Ciampoli, Judith. “Alexander Gardner: Along the 35th Parallel in the 1860s.”
Gateway Heritage I. Number 3 (Winter, 1980): pp. 14–17.
Goodrich, James. “David Waldo.” Missouri Historical Review LXVI. Number 1

(January 1977): pp. 155–184.
Hurt, R. Douglass. “Planters and Slavery in Little Dixie.” Missouri Historical

Review 88, No. 4 (July 1994): 397–415.
Invincible Magazine, St. Louis: Volume 1 (April 1913 – April 1914).
Klement, Frank C. ”Phineas C. Wright, the Order of American Knights and the
Sanderson Expose’.” Civil War History 18 (1972): pp. 5 – 23.
Missouri Alumnus. Columbia (MO): University of Missouri Alumni Association.
Phillips, Christopher. “Calculated Confederate: Claiborne Fox Jackson and the

Strategy for Secession in Missouri.” Missouri Historical Review XCIV, Number
4 (July 2000): pp. 389 – 414.
Sampson, F. A. “The Honorable John Brooks Henderson.” Missouri Historical

Review 7, No. 4 (July 1913). pp. 237-41.
249
BIBLIOGRAPHY
Spiess, Lincoln Bunce. “Louis Schultze: A Lost Artist Rediscovered.” Gateway

Heritage II, Number 3 (Winter, 1981–2). p. 3–9.
History–Missouri (St. Louis)
Cox, James. Old and New St. Louis. St. Louis: Central Biographical Publishing
Company, 1894.
Edwards, Richard and M. Hopewell, M.D. Edwards’ Great West and her
Commercial Metropolis. Embracing a General View of the West and a Complete
History of St. Louis. St. Louis: Published at the Office of “Edwards’ Monthly,”
1860.
History of the City of St. Louis and Vicinity. St. Louis: John Devoy, 1898.
Hyde, William and Howard L. Conrad. Encyclopedia of the History of St. Louis.
St. Louis: Southern History Company, 1899.
Primm, James Neal. The Lion of the Valley: St. Louis, Missouri 1764–1980. St.
Louis: Missouri Historical Society Press.
Reavis, L. U. St. Louis. the Future Great City of the World. St. Louis: Gray.
Baker Company, 1875.
Scharf, J. Thomas. History of St. Louis City and County. Philadelphia: Louis H.
Everts & Company, 1883.
Stephens, Walter B. St. Louis. the Fourth City, 1764–1909. St. Louis: S. J.
Clarke Publishing Company, 1909.
History–Missouri (County and Local)
Atlas Map of Lafayette County. St. Louis: Missouri Publishing Company, 1877.
Bench and Bar of Boone County, Missouri. Columbia (Missouri): 1916.
The Daily News’ History of Buchanan County and St. Joseph, Missouri. St.
Joseph: Press of L. Hardeman, 1898.
250
BIBLIOGRAPHY
Douglass, Robert S. History of Southeast Missouri. Chicago: Goodspeed

Publishing Company, 1888.
Dyer, Robert L. Boonville: An Illustrated History. Boonville (MO): Pekitanoui

Publications, 1987.
Dyson, Verne (ed.). Picturesque Fayette and its People. Fayette (MO): Press of
the Advertiser, 1905.
Hickman, W. Z. History of Jackson County. Cleveland: Historical Publishing

Company, 1920.
History of Andrew and Dekalb Counties. St. Louis: Goodspeed Publishing

Company, 1888.
History of Boone County, Missouri. St. Louis: Western Historical Company,

1882.
History of Buchanan County and St. Joseph. St. Joseph: St. Joseph Publishing
Company, 1898.
History of Buchanan County and St. Joseph, Missouri. St. Joseph: History
History of Caldwell and Livingston Counties. St. Louis: National Historical

Company, 1886.
History of Callaway County. St. Louis: National Historical Company, 1884.
History of Clay and Platte Counties. St. Louis: National Historical Company,
1885.
History of Clinton County, 1881. (Title page missing.)
History of Greene County. St. Louis: Western Historical Company, 1883.
History of Henry and St. Clair Counties. St. Joseph: National Historical
Company, 1883.
History of Hickory, Polk, Cedar, Dade, and Barton Counties, Missouri. Chicago:
Goodspeed Publishing Company, 1889.
251
BIBLIOGRAPHY
History of Howard and Chariton Counties. St. Louis: National Historical

Company, 1883.
History of Howard and Cooper Counties, Missouri. St. Louis: National Historical
Company, 1883.
History of Johnson County, Missouri. Kansas City: Missouri Historical Society,

1881.
History of Lafayette County. St. Louis: Missouri Historical Company, 1881.
History of Lewis, Clark, Knox, and Scotland Counties. St. Louis: Goodspeed
History of Lincoln County, Missouri. Chicago: Goodspeed Publishing Company,

1888.
History of Monroe and Shelby Counties, Missouri. St. Louis: National Historical
Company, 1884.
History of Pettis County, Missouri. Clinton (Missouri): The Printery (reprint of

1882 edition).
History of Pike County, Missouri. Des Moines: Mills & Company, 1883.
History of Saline County, Missouri. St. Louis: Missouri Historical Company,

1881.
History of St. Charles, Montgomery, and Warren Counties. St. Louis: National
Historical Publishing Company, 1885.
History of Southeast Missouri. Chicago: Lewis Publishing Company, 1912.
Hubble, Martin Jones. Personal Reminiscences and Fragments of the Early

History of Springfield, Missouri. Springfield: Inland Printing Company, 1914.
Illustrated Atlas Map of Howard County. St. Louis: Missouri Publishing

Company, 1876.
Illustrated Atlas Map of Lewis County. Philadelphia: Edward Brothers of

Missouri (sic): 1878.
252
BIBLIOGRAPHY
Illustrated Atlas Map of Pike County. (no loc.). Illinois: W. R. Brink &
Company, 1875.
Illustrated Historical Atlas Map of Buchanan County. (no loc.): Brink.

McDonough & Co.,1877.
Illustrated Historical Atlas of Marion County. Quincy (IL): T. M. Rogers, 1875.
Illustrated Historical Atlas of Monroe County. Philadelphia: Edwards Brothers of

Missouri (sic): 1876.
Portrait and Biographical Record of Buchanan and Clinton Counties. Chicago:

Chapman Brothers, 1893.
Portrait and Biographical Record of Clay, Ray, Carroll, Chariton and Linn
Counties. Chicago: Chapman Brothers, 1893.
Portrait and Biographical Record of Johnson and Pettis Counties. Chicago:

Chapman Publishing Company, 1895.
Rainey, T. C. Along the Old Trail: Pioneer Sketches of Arrow Rock and Vicinity.
Marshall (MO): Marshall Chapter. Daughters of the American Revolution, 1914.
Standard Atlas of Adair County, Missouri. Chicago: George A. Ogle &

Company, 1898.
Williams, Walter. History of Northwest Missouri. Chicago: Lewis Publishing

Company, 1915.
Young, William. Young’s History of Lafayette County. Indianapolis: B. F.

Bowen & Company, 1910.
BANKING AND FINANCE
Myers, Forest E. Basics for Bank Directors. 2nd Edition. Kansas City: Federal
Reserve Bank of Kansas City, 1998.
Spong, Kenneth. Banking Regulation: Its Purposes, Implementation, and Effects.

4th Edition. Kansas City: Federal Reserve Bank of Kansas City, 1994.
253
BIBLIOGRAPHY
ENTREPRENEURSHIP
Cawelti, John C. Apostles of the Self-Made Man. Chicago: University of Chicago

Press, 1965.
Chell, Elizabeth, Jean Haworth and Sally Brearley. The Entrepreneurial

Personality: Concepts, Cases and Categories. London: Routledge, 1991.
Greenfield, Sidney M., Arnold Strickon and Robert T. Aubey, eds. Entrepreneurs
in Cultural Context. Albuquerque: University of New Mexico Press, 1979.
Miner, John B. A Psychological Typology of Successful Entrepreneurs. Westport

(Connecticut): Quorum Books, 1997.
Rostow, W. W. The Stages of Economic Growth: A Non-Communist Manifesto.

3rd edition. New York: Cambridge University Press, 1990.
Schumpeter, Joseph A. The Theory of Economic Development: An Inquiry into

Profits, Capital, Credit, Interest, and the Business Cycle. Harvard Economic
Studies. Volume XLVI. Cambridge: Harvard University Press, 1934.
Veblen, Thorstein. The Theory of Business Enterprise. New York: Mentor

Books, 1932.
Wilken, Paul H. Entrepreneurship: A Comparative and Historical Study.

Norwood (New Jersey): Ablex Publishing, 1979.
OTHER
Rand McNally Road Atlas, 1999. Skokie, Illinois: Rand McNally, 1999.
United Daughters of the Confederacy Minutes Book, 1999 General Meeting.

Richmond: United Daughters of the Confederacy, 1999.
254

Missouri Banks and the Civil War the End

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Missouri Banks and the Civil War the End

Uploaded by

Copyright:

Available Formats

MISSOURI BANKS AND THE CIVIL WAR:

THE END OF A PROSOUTHERN ENTREPRENEURIAL ELITE

the Faculty of the Graduate School

of the Requirements for the Degree

Dr. LeeAnn Whites, Supervisor

I wish to acknowledge the help and advice of various persons in the

History Department at the University of Missouri at Columbia, was of invaluable

Theodore Koditschek of the University of Missouri History Department also

provided many useful criticisms which helped to guide my efforts. Professor

Ronald Ratti of the Economics Department provided valuable insight regarding

by financial support provided by the Brownlee Fund of the State Historical

Society of Missouri, and a Faculty Development Grant from William Woods

Sylvan Villa, near Glasgow, Missouri, 1940 1 Frontpiece

Missouri banks of issue and their branches, June 1861 2 18

Missouri slavery in 1860 3 22

Farmers Bank of Missouri Ten Dollar Bill 24

Mechanics Bank of St. Louis Twenty Dollar Bill 24

Composition of Money (M1) in 1860 4 25

Bank of St. Louis parent branch, St. Louis, 1860 5 28

Cooper County – Mean Household Property by Decile, 1860 6 33

Cooper County–Share of Aggregate Property/Income

Cooper County–Heads of Households by Regional Origin, 1860 8 37

Cooper County–Household Property by Regional Origin, 1860 9 37

Cooper County–Household Property by Length of Residence, 1860 10 38

Reverend Thomas Johnson 12 55

Captain William David Swinney 13 55

Colonel Edward Cresap McCarty 14 58

Governor Claiborne Fox Jackson 18 87

Former Governor Stirling Price 19 91

Frequency Distribution of Bank Cases 20 122

Promissory Note 21 123

Cooper County, Missouri–Defaulted Promissory Notes, 1861 22 125

Cooper County Sheriffs’ Sales – Number of Judgments per

Cooper County Sheriffs’ Sales – Bank Judgments–

Cooper County Sheriffs’ Sales – Number of Bank-Judgments –

Goodbye to All That: Residence of William B. Sappington,

Account Gains and Losses Summary27 192

Loan Portfolio Overview, 1858 – 1865 28 195

Loan Portfolio Detail, 1860 – 2 29 197

Suspended Debt Overview, 1858 – 1865 30 198

Suspended Debt to Total Portfolio Overview, 1858 – 1865 31 199

Suspended Debt Detail, 1860 – 1862 32 200

Extended Loan Portfolio Overview, 1858 – 1865 33 201

Government Debt to Total Assets Overview, 1858 – 1865 34 202

Real Estate and Furniture Overview, 1858 – 1865 35 202

Real Estate and Furniture Detail, 1860 – 1862 36 203

Total Cash Overview, 1858 – 1865 37 204

Total Cash Detail, 1860 – 1862 38 206

Circulation Outstanding Overview, 1858 – 1865 39 209

Circulation Outstanding Detail, 1860 – 1862 40 210

Due Depositors Overview, 1858 – 1865 41 210

Due Depositors Detail, 1860 – 1862 42 211

Clearinghouse Accounts Overview, 1858 – 1865 43 213

Clearinghouse Accounts Detail, 1860 – 1862 44 214

Current and Noncurrent Assets Overview, 1858 – 1865 45 220

Suspended Debt to Total Assets Overview, 1858 – 1865 46 221

Net Working Capital Overview, 1858 – 1865 47 222

Net Working Capital to Current Assets Overview, 1858 – 1865 48 222

Cash Ratio Overview, 1858 – 1865 49 223

Debt to Equity Ratio Overview, 1858 – 1865 50 225

Total Equity to Total Liabilities Overview, 1858 – 1865 51 227

Net Income Overview, 1858 – 1865 52 229

Return on Assets Ratio, 1858 – 1865 53 230

Return on Equity Ratio, 1858 – 1865 54 230