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Private Banking in Antebellum Virginia: Thomas Branch & Sons of Petersburg

Published online by Cambridge University Press:  13 December 2011

Howard Bodenhorn
Howard Bodenhorn
Affiliation:
HOWARD BODENHORN is associate professor of economics at Lafayette College.
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Abstract

This article investigates the role of the private banking house of Thomas Branch & Sons of Petersburg, Virginia, in promoting entrepreneurship and economic development in the early United States. It argues that while Branch adopted many of the methods and practices of antebellum commercial banks in that he accepted and created deposits and followed a real-bills philosophy in his lending, he also differed from them by extending his services to a particular market niche. Many of his borrowers were young entrepreneurs who were just embarking upon their own commercial ventures. In addition, many of his customers had accumulated only limited wealth. If Branch's actions, then, can be considered indicative of those of private bankers more generally, this article reveals the importance of small town private bankers in supplying monetary and intermediary services to local communities, and moreover, helps clarify their place in the history of antebellum banking.

Type
Articles
Information
Business History Review , Volume 71 , Issue 4 , Winter 1997 , pp. 513 - 542
Copyright
Copyright © The President and Fellows of Harvard College 1997

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References

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21 I thank an anonymous referee for bringing this possibility to my attention.

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37 The failure of the directories and other sources to list such men as Branch as private bankers supports both Sylla's and Schweikart's contention that the size of the industry has been seriously underestimated and unfairly ignored by economic and business historians.

38 B&C Records, Bill Book, 1852–1856.

39 Virginia. General Assembly. Assembly Document #41 (1856).

40 B&C Records, Ledger, 1846–1858; B&C Records, Bill Book, 1848–1851; Bill Book, 1852–1856.

41 Adams, “Bank of Stephen Girard,” 851. The third may be viewed as a subset of the second, but it is of sufficient importance that it will be treated as a separate activity.

42 These were the only two years for which deposits could be constructed because Branch had the accounts tallied as of 1 January and the balances recorded in the General Ledgers. Because several subsequent ledgers are missing and no records of subsequent tallies could be found, it would be nearly impossible to reconstruct accounts for later years.

43 B&C Records, Ledger, 1846–1858.

44 Sylla, “Forgotten Men,” 178–81. By way of comparison, on 1 January 1855 the Farmers Bank of Virginia held $105,259 in deposits; the Exchange Bank, $193,631; and the Bank of Virginia, $83,013. While Branch's lending operations were considerably smaller than those of his chartered rivals, his deposit holdings compare favorably. Again, this adds credence to the contention that studies of antebellum American monetary and financial systems that ignore private banking seriously underestimate the volume of both money and intermediation occurring in the early republic. Virginia. General Assembly. Assembly Document #41 (1856).

45 One contemporary observer believed Branch & Sons did “the largest business of its kind in the city.” See Claiborne, John Herbert, Seventy-Five Years in Old Virginia (New York, 1904), 50Google Scholar.

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48 Hammond, Banks and Politics, 193.

49 B&C Records, Reference Book, 1852–1856.

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53 If we assume a lower rate of return and income in excess of that of an average artisan, a $250 loan as a percent of gross revenue or gross sales becomes even smaller. Scattered pieces of evidence from the antebellum era also suggests that clerks and bookkeepers (an important class of borrowers at Branch's house) earned substantially more than skilled artisans. In 1854 the discount clerk at the Massachusetts Bank of Boston has an annual salary of $1,300. In 1848 bookkeepers at the Bank of the State of Missouri earned $1,000 per annum. It seems clear, then, that Branch was not lending to the poor, but he was offering credit to the young and those just beginning their climb up the commercial ladder. See Gras, Massachusetts First National, 535–36, and Cable, John Ray, The Bank of the State of Missouri (New York, 1923), 213Google Scholar.

54 In determining occupations, names of discounters were matched to either the 1860 manuscript census for Dinwiddie, Prince Edward, and Henrico counties, a city directory for Petersburg or Richmond, or both. Branch's discounting was apparently quite local. For 1849, 70.5 percent of all discounts (some individuals discounted more than one note) were matched to either the manuscript census or a city directory. In 1850, the percentage was 71.8 percent; 1851, 64.0 percent; 1852, 69.3 percent; 1853, 66.6 percent; 1854, 73.1 percent; and 1855, 63.7 percent. The following analysis also assumes that occupations did not change between a given year and 1860.

55 The class “merchant” includes such occupations as commission merchants, clothiers, confectioners, druggists, grocers, wholesale hardware dealers, merchant tailors, and so forth.

56 Manufacturers included blacksmiths, carriage makers, coopers, cotton factories, founders, millers, tobacconists, wheelwrights, etc. Service occupations include such individuals as attorneys, railroad baggage masters, bank tellers and cashiers, bookkeepers, clerks, exchange brokers, hostlers, liverymen, physicians, and teachers.

57 On several occasions Branch was called on to honor such notes. To one client he wrote: “We advised you in the 25th inst that your note payable at the Farmers Bank of this place for $1,750, and endorsed by ourselves would fall due this day. As you have forgotten to make any arrangements for its retirement…we have paid it…” Branch to W.R. Johnson, undated [ca. Nov. 1847], B&C Records, Letterbook, 1846–1849.

58 Lamoreaux, Insider Lending, 54–55.

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60 The years 1854 and 1855 were chosen because ages and occupations were matched to the 1860 manuscript census schedules. Because only 48.1 percent of discounters in Branch's bill books for 1854 and 45.2 percent for 1855 could be matched to the schedules, it seemed unprofitable to match for earlier years. These percentages are lower than those reported in note 54 above because this count matches borrowers; note 54 reported matches of discounts and some individuals discounted more than one note.

61 Records of the Black River Bank. Various ledgers. Jefferson County Historical Society (Watertown, N.Y.).

62 Only those occupations for which four or more individuals were matched are included in the averages.

63 Lebsock, Free Women, 28–30, 33.

64 Atack, Jeremy, “The Agricultural Ladder Revisited: A New Look at an Old Question with Some Data for 1860,” Agricultural History 63 (1989): 19Google Scholar.

65 The presumption throughout has been that men were the only discounters at Branch's house. Most borrowers were, in fact, men. Branch discounted notes for only three women: Paulette Harolds (one note) in 1851, Eliza Ritchie (three) in 1855, and Jane C. Oliver (four) between 1850 and 1852. Jane Oliver is an interesting study in female entrepreneurship. Between 1854 and 1856 she purchased fifteen lots on which she had houses built. She financed most of this speculation with credit and by 1856, when the houses had not yet sold, her creditors forced her to sell the lots and houses, her plantation and seven of her slaves to meet their demands. To what purpose she put the discounts received at Branch's house must remain a matter of speculation as they were simply listed as “discount.” It may be reasonable, therefore, to assume that she had embarked on her speculations prior to the building fiasco. Lebsock, Free Women, 126.

66 Lee Soltow, “Inequalities in the Standard of Living in the United States, 1798–1875,” in American Economic Growth and Standards of Living, ed. Gallman and Wallis, 128.

67 Although he does not offer the same age categories, Soltow's research into wealth distribution in the antebellum South suggests that the 1850s did not differ markedly from the 1870s (with the exception, of course, of slaveholding). See Soltow, , “Economic Inequality in the United States in the Period from 1790 to 1860,” Journal of Economic History 31 (Dec. 1971): 822–39CrossRefGoogle Scholar.

68 Cameron, Rondo, Banking in the Early Stages of Industrialization (New York, 1967), 12–13Google Scholar.

69 See Bodenhorn, Howard, “Capital Mobility and Financial Integration in Antebellum America,” Journal of Economic History 52 (Sept. 1992): 585–610CrossRefGoogle Scholar and Bodenhorn, Howard and Rockoff, Hugh, “Regional Interest Rates in Antebellum America,” in Strategic Factors in American Economic History: A Volume to Honor Robert W. Fogel, ed. Goldin, Claudia and Rockoff, Hugh (Chicago, Ill., 1992), 159–87Google Scholar for statements of the issues surrounding the importance of geographic capital mobility.

70 To one client Branch wrote; “We have this day drawn on you…at Bank of Va…we have no blank notes of yours in our possession.” Branch to Palmore & Daniels, 21 May 1846. B&C Records, Letterbook, 1846–1849.

71 Woodman, Harold, King Cotton and His Retainers (Lexington, Ky., 1968), 41Google Scholar.

72 In 1845 Branch extended $145,240 in loans. Commercial banks had loans outstanding in excess of $576.1 million. The calculation assumes that commercial banks rolled their loans over three times per year (an average four month loan term) so that the total volume of commercial bank credit was $1,728.4 million and that the total volume of private bank credit was $174.3 million. Annual Report of the Comptroller of the Currency (Washington, D.C., 1876), XCIGoogle Scholar.

73 The calculation was based on the same assumptions as those in note 72. The South included Virginia, North and South Carolina, Georgia, Alabama, Louisiana, Mississippi, Kentucky, and Tennessee. Annual Report of the Comptroller of the Currency (Washington, D.C., 1876), CIX–CXVGoogle Scholar.